Travelport’s IPO to raise $1.8b

Jan 20, 2010

Travelport has decided to proceed with an unregistered offering of shares within the US in connection with an initial public offering of shares being made to institutions in the UK and to eligible institutional investors internationally.

Published: 20 Jan 2010

Travelport has decided to proceed with an unregistered offering of shares within the US in connection with an initial public offering of shares being made to institutions in the UK and to eligible institutional investors internationally.

The proposed IPO is intended to raise $1.775 billion, with the net proceeds used to reduce indebtedness of the Travelport group.

The transaction is expected to close in the first quarter of 2010, subject to market and other customary conditions.

The money raised will go towards paying off borrowings by its private equity owner Blackstone, and includes a $225m investment by the government of Singapore Investment Corporation in return for a 7.19% shareholding in the business.

Travelport’s chief executive, Jeff Clarke, said there had been signs of a rebound in the recession-hit travel industry towards the end of 2009: “I believe it is a great time for a cyclical recovery.”

Net proceeds from the offer will pay down Travelport’s $4.1 billion debt to around $2.3 billion, or approximately 3.5 times the company’s 2009 earnings, reported Dow Jones. Blackstone owns about 70% of Travelport, while One Equity Partners, part of JP Morgan Chase & Co. (JPM), and Technology Crossover Ventures hold about 11% apiece in the shares. Management owns roughly 7%.

Those shareholders will keep stakes in Travelport for at least six months, in a nod to investors' long-held concern that private equity firms often cash out of their companies at inflated prices and then sit back and watch the stock sink. The existing owners also stand to get the proceeds of a possible 15% overallotment that can be made in case of strong investor demand.

Travelport was formed from Cendant's Galileo and GTA brands, which were bought by Blackstone, Technology Crossover Ventures and the company's management in 2006.