Bloomberg News

Vacation-Rental Site HomeAway Gains 49% in First Trading Day

June 29, 2011

(Updates share price in second paragraph.)

June 29 (Bloomberg) -- HomeAway Inc., the vacation-rental website operator, surged on its first trading day after raising $216 million in an initial public offering, selling its shares at the top end of the marketed range.

The shares climbed $13.21, or 49 percent, to $40.21 as of 4 p.m. New York time on the Nasdaq Stock Market, trading under the symbol AWAY. The Austin, Texas-based company sold 8 million shares at $27 apiece in its IPO yesterday.

HomeAway sold about 10 percent of its common stock in its IPO, following LinkedIn Corp. in offering a smaller stake than most Internet companies. Enthusiasm for a wave of technology IPOs as well as the scant number of shares offered contributed to HomeAway’s gains, said Pat Becker Jr., who manages $2.4 billion as a principal at Becker Capital Management in Portland, Oregon.

“They’ve done well because of the limited float,” Becker said in an interview today. “There’s just not supply to go around and you see some enormous moves in stock prices.”

The closing price values HomeAway at $3.2 billion, or 19 times last year’s revenue. Travel booking website Priceline.com Inc. has a market value of $25 billion, 8.1 times 2010 revenue. Expedia Inc. trades at 2.3 times last year’s revenue and is valued at $7.8 billion.

Morgan Stanley, Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. served as lead managers on the IPO.

Internet companies sold an average of 17 percent of their outstanding shares in U.S. IPOs this year, according to data compiled by Bloomberg. Zynga Inc., the biggest maker of games for Facebook Inc.’s social-networking website, may opt to list less than 10 percent of its shares in an IPO, a person familiar with the plans said this month.

“Rocket Ship” Companies

Brian Sharples, HomeAway’s chief executive officer, said his business is different than the recent “rocket ship” Internet companies that have offered shares to the public because it benefits from consistent growth. Property owners and managers pay to list vacation rentals on HomeAway.com, which vacationers can peruse without charge.

“HomeAway is really a very, very predictable business,” he said. “We have been an above average growth company but very stable in terms of our growth year to year.”

More than 90 percent of HomeAway’s $168 million in revenue came from property listings last year, according to regulatory filings. Revenue increased $48 million, or 40 percent, from 2009. The company, founded in 2005, had more than 560,000 listings in over 145 countries as of March 31, it said in a filing.

‘On the Map’

HomeAway expects the IPO to increase those numbers by drawing more customers to its 31 websites, CEO Sharples said.

“Even though we have a great company, most consumers around the world have never heard of the business,” Sharples said in an interview today. Taking the company public “really puts the business on the map.”

Sharples plans to attract more property managers to the company’s sites. While professional managers control about a third of U.S. and European rental homes, they account for 10 percent of HomeAway’s revenue, he said.

HomeAway purchased two vacation-rental management software providers in 2010 in a bid to make it easier for property managers to publish listings.

The company is trying to make more money from each listing by adding new features, Sharples said. HomeAway recently gave homeowners and managers the ability to accept credit cards and e-checks online, earning a fee from each transaction, he said.

HomeAway’s biggest shareholders include Austin Ventures, Redpoint Ventures, Technology Crossover Ventures, Institutional Venture Partners and Tiger Global Management. None sold shares in the IPO, according to filings. The company plans to use the proceeds to distribute unpaid dividends on convertible preferred stock.

--Editors: Lisa Rapaport, Julie Alnwick

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net


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