Vacasa to Go Public in $4.5 Billion SPAC Merger on Heels of Vacation Rentals Surge

Vacasa, the largest full-service vacation rental property management company in the U.S., said on Thursday it planned to merge with blank check company TPG Pace Solutions.

The transaction is set to give Vacasa, a startup based in Portland, Oregon, an enterprise value of $4.5 billion. The deal is expected to lead to its public listing on a U.S. stock exchange under the ticker symbol VCSA.

Vacasa’s merger with the special-purpose acquisition company (SPAC) is set to close “as soon as possible,” according to a statement. CEO Matt Roberts will continue to lead the company. The combined company forecasts it will have a balance sheet of $485 million in gross cash.

Vacasa has disclosed raising $626.5 million in private equity funding — more than any other startup of its category. Private equity firms Silver Lake, Riverwood Capital, and Level Equity, Altos Capital, Adams Street, and NewSpring Capital, together with founder Eric Breon and management, expect to roll all of their equity and plan to retain an 88 percent ownership of the company following the transaction’s close. That’s slightly more than the typical 80 percent ownership at many special-purpose acquisition companies.

Vacasa professionally manages more than 30,000 vacation homes. 2021, the company expects to generate $757 million in revenue on a gross booking value of about $1.6 billion. The company forecasts a revenue compound annual growth rate of 31 percent from 2021 to 2023, with revenue growing to $1.3 billion by 2023.

If revenue reached roughly $1.3 billion in 2023, that would imply a multiple of 3.5 times the blank check company’s post-deal enterprise value of $4.5 billion. That’s roughly in line with $90 billion rival Booking Holdings and far below Airbnb’s approximately 12 times multiple.

Comparing the property management company with online travel agencies is relevant because Vacasa tries to drive direct bookings and repeat booking via its website and mobile app. As of January, about 35 percent of Vacasa’s revenue came from bookings direct to the company’s site or mobile app. The startup hadn’t done traditional TV or billboard marketing.

It has been a quick trip for TPG Pace Solutions as a blank check company. The vehicle, spawned by alternative asset firm TPG (which has $96 billion of assets under management), was listed in April. Its success in raising $285 million in cash, finding a target, and securing additional funds from other investors, suggests the market for special purpose acquisition companies is shaking off some recent market jitters.

Having about $480 million in cash on its balance sheet may let Vacasa do more mergers and acquisitions. Its largest acquisition to date was of Wyndham Vacation Rentals for $162 million.

Earlier this year, Skift previewed the high probability Vacasa would seek to go public this year. Vacasa has partly benefited from a surge of U.S. consumer interest in short-term rentals during the pandemic. Skift Research’s Travel Tracker has shown that the vacation rental market share of total accommodations doubled between February 2020 and November 2020. Skift Research subscribers can read our May report: The Short-Term Rental Landscape Will Never Be the Same.

Vacasa is joining others in the travel and transport sector in raising money and going public. So far this year, Inspirato, Sonder, HomeToGo, Cvent, and SWVL announced mergers via blank check companies, with others possible. (See Skift’s coverage of special-purpose acquisition companies in travel.)

We’ll update this story with the investor presentation shortly.

See full article