Latin America-based online travel agency Despegar has raised
$200 million in two transactions completed Wednesday.
In tandem with the report of its financial results for the
second quarter of 2020, Despegar says it has a private placement with L
Catterton, the largest consumer-focused private equity fund in the world, to
issue and sell preferred stock plus warrants to purchase ordinary shares for an
aggregate price of $150 million.
Despegar has also announced an agreement with Waha Capital, an
Abu Dhabi-based investment company, to issue and sell Series B preferred shares
for $50 million.
“This capital raise further underscores our commitment to
strengthening our balance sheet, while at the same time providing financial
flexibility to grow organically and through opportunistic M&A transactions,
a key strategic initiative of ours,” says Damian Scokin, CEO of Despegar.
And says L Catterton Latin America managing partner Dirk Donath: “As
the leading online travel agency in Latin America with strong brand recognition,
Despegar has significant potential to continue driving growth in a highly
attractive market. We believe Despegar is well positioned to succeed over the
long term as the travel industry recovers.”
But like its counterparts around the world, Despegar took a
big hit from COVID-19 in the second quarter of 2020.
On a constant currency basis, the company’s gross bookings
declined 94% year-over-year and revenue was negative $9.7 million.
Transactions and room nights were down 92% and 91%, respectively,
compared to the second quarter of 2019, and adjusted EBITDA loss was $32
“This past quarter, we were impacted not only by the natural
fall off in travel demand but also by the travel restrictions imposed by the
different governments in the region which, in some countries, were rather
severe,” Scokin says.
“Encouragingly, we have seen a positive trend in bookings
both in June and July that has continued during the first two weeks of August.”
Scokin says the company has taken several steps to mitigate
the impact of the pandemic, including a 32% reduction in structural costs
year-over-year – surpassing the goal it announced in the first quarter – and preserving
Despegar also renegotiated the terms of its Best Day acquisition
that was announced
in January. The acquisition was originally valued at $136 million, but now Despegar
says it reduced the purchase price by 58% and deferred the transaction until
“While the outlook remains uncertain, we have taken
appropriate action to mitigate the effects of the pandemic while continuing to
protect our business and laying the foundation for an even stronger competitive
position when travel once again resumes,” Scokin says.
“I have been impressed and inspired by how the Despegar team
has come together and how our employees responded to this crisis.”
Also announced with the financial report, Despegar has acquired
an 84% equity stake in Koin, a Brazilian online payment platform, for about $4
million. Despegar says the move will enable it offer better financing options its
Despegar operates in 20 countries and offers products from
300 airlines, more than 520,000 accommodation providers and more than 1,000 car