Travelport, which provides travel services such as wholesale hotel bookings, aims to sell $1.775 billion worth of new shares in the listing on the London Stock Exchange (LSE). The Government of Singapore Investment Corp (GIC) will buy $225 million worth of new shares at the same time as the IPO, which will give it a 7.19 percent stake in the firm.
Travelport is selling more than 50 percent of its enlarged share capital, and will see its net debt level drop to $2.3 billion after the listing from $4.1 billion, Chief Executive Officer Jeff Clarke said during a call with reporters. The ratio of net debt to earnings before interest, debt and amortisation of goodwill (EBITDA) will be reduced to 3.5 times from 6.5 times now, a person close to the company said, and in the long run to 1.5 to 2 times.
The deal values Travelport at about 14 times 2010 earnings and 8 to 9.5 times enterprise value to EBITDA, in line with peers' 15 times price-to-earnings ratio and 9 times EV/EBITDA. Rivals Orbitz, Priceline.com and Expedia all traded higher after the announcement. CEO Clarke said Travelport picked the LSE for a listing because the bourse attracts global investors and as a large part of its clients are based in Europe.
Travelport's IPO is likely to be part of many similar deals from private equity firms that want to exit acquisitions they made at the height of the credit boom, bankers said. Travelport will start its bookbuilding process on February 1, while shares are expected to begin trading on February 12, a person close to the deal said. UBS is the sole sponsor for the deal, while Credit Suisse, Deutsche Bank, Barclays Capital and Citigroup are joint bookrunners.