With Travelport's latest attempt to IPO now out in the open, analysts and potential investors will be poring over the details filed today.
The S1 placed with the Securities and Exchange Commission is the official document required to set the wheels in motion ahead of a potential listing in the New York (Travelport scrapped an earlier plan to list, so nothing is cast in stone just yet).
The first thing to note is the time and location for the attempt by the Atlanta, US-based company, whose current principal owners are Angelo, Gordon and Co (approx 22%), investment funds associated with Q Investments (approx 14%) and Blackstone (approx 13%).
The attempt four years ago was to list on the London Stock Exchange, so a switch to the US illustrates perhaps a stronger marketplace for tech-related businesses.
The timing, whilst somewhat inevitable given the recent and successful listing by Sabre (shares up almost a fifth since launch day) and relative ducks-in-a-row on the product and financial structure sides of the business, is perhaps earlier than some may have expected.
But the general thinking from multiple sources we've heard from today simply suggests that a window of opportunity opened up for the investor roadshows - when summer visits can apparently be slotted in more easily - alongside a favourable reaction to its recent financial performance.
The company may simply believe it has a better story to tell the financial community in terms of the product roadmap.
The initial amount to be raised, stated in the S1, is some $100 million, but this is likely to change. Net proceeds from the IPO will be used reduce its outstanding indebtedness.
The IPO represents a victory of sorts, as it is a major turnaround from October 2011, when Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on parent company Travelport Holdings to "SD'"(selective default).
Still, with the company now in an official "quiet period", it is left to the S1 to share some things-you-may-not-know about Travelport:
- Travelport doesn’t plan to pay out dividends to shareholders.
- Air tickets represent 76% of its net revenue. Business lines in hotel and other products derived 18% of revenue, and IT services (such as platforms to airlines for pricing, ticketing, and ground handling) drove 6%.
- As of March 31, 2014, total debt, excluding capital leases, was $3.389 billion. In comparison, net revenue was a little over $2 billion, derived from processing more than $85 billion in transactions.
- Perhaps one rarely talked about corporate extension is its 51% ownership of InterGlobe (IGT Solutions), an application development services provider used for internal and external software development based in New Delhi, India.
- It currently hosts and manages the reservations systems for Delta Air Lines, and provides IT subscription services for applications in fares, pricing and e-ticketing, directly and indirectly, to 297 airlines and airline ground handlers.
- It provides booking tools to approximately 400 airlines globally, including approximately 85 low cost carriers.
- Last year, the troubled European countries of Greece, Italy, Spain and Portugal represented approximately 7% of its net revenue.
- Travelport is a Bermuda limited liability exempted company.
RISKSThe move, of course, is not without risks -- including to potential buyers of the shares.
Global travel means global risks to travel businesses. And so it is for Travelport, given that it has customers in more than 170 countries.
Anything from a volcano to a war to shift in currency exchange rates could affect its operations.
But here are some other possible risks:
Lawsuits
Travelport may be exposed through eNett, its majority-owned subsidiary, which runs a the payment solutions business.
Due to eNett’s “innovative solutions, the regulatory environment for eNett is not clearly defined in certain jurisdictions." So, there might be a legal surprise.
The competence of its partners
Travelport depends on third-party national distribution companies to market its services in several regions.
The company implies that this risk is mitigated because it has a diverse portfolio.
Its top ten largest clients generated approximately 11% of revenue in 2013, and no single one accounted for more than 5% of revenue, reducing the risk of a bad egg ruining the bottom line.
Consolidation among travel agencies and airlines
Continued pressure on travel agencies in the digital era could hurt Travelport's commission-based ticket processing business.
Airlines might also add surcharges onto fares booked through travel agencies or pass on charges to travel agencies, that could hurt its commission-based business.
It also faces competition for contracts from its competitors. For the year ended December 31, 2013, it says it accounted for 26% of global GDS-processed air segments — smaller than the shares claimed by rivals Sabre and Amadeus.
Security
Travelport relies on a single data center, in Atlanta, Georgia, to conduct its business. Also, it says in its S-1:
“We have been the target of data security attacks and may experience attacks in the future.”
Here's Travelport CEO Gordon Wilson explaining his brand, in a five-minute video launched late last week:
NB: Additional reporting by Kevin May.