Germany’s response to AirBnB hopes to spark SPAC boom in Europe
Germany’s HomeToGo celebrated its Frankfurt stock exchange debut on Wednesday through a special purpose acquisition vehicle, a blank check company. Experts are watching the performance closely to see if it could finally spark a SPAC boom among the country’s often risk-averse investors.
The European SPAC market is dwarfed by that of the United States, worth $3.9 billion so far this year compared to $98.5 billion in the United States, according to Deloitte. But it’s only just begun the board argued, as the number of transactions tripled compared to last year, while the volume increased eightfold. For applicants like HomeToGo, the benefit is an expedited process that costs less than a typical IPO, with less funding uncertainty as both parties agree to a fixed price as part of the deal.
Why is this list important?
It’s the country’s first attempt to latch on to the recent SPAC craze after an abortive effort in 2009 led by ex-Bertelsmann CEO Thomas Middelhoff’s Germany I. HomeToGo goes public through a reverse merger with Shell holding Lakestar SPAC I, issued by angel investor Klaus Hommel’s venture capital firm of the same name. In July, HomeToGo agreed to be acquired in a deal valuing the company’s equity at €1.2 billion.
Nevertheless, around 37% of SPAC investors refused to buy HomeToGo, according to Handelsblatt, reducing revenue by approximately €100 million to €250 million ($293 million). To maximize growth, HomeToGo said it has no plans to pay dividends for the foreseeable future.
What is the business?
HomeToGo claims to be the world’s largest online marketplace for vacation rental supply and demand, touting an engaging customer experience as well as strong relationships with its rental owners among its strengths. Customers can search through 14 million beach houses, cabins, houseboats, and even castles listed worldwide, with the option to search for those that are particularly close to the water, those that have amenities like saunas or those that welcome the family dog.
The company estimates the global accommodation market at €1 trillion and says vacation rentals in particular remain both highly fragmented, utterly opaque and underserved. Co-founder Patrick Andrae thinks the company will benefit from the growing demand for what he calls “workations”.
Unlike a hotel, a rented vacation home could be the perfect place to vacation, while adding a few weeks of remote work. “Why should you stay in cold, rainy Germany during the winter, when you can spend a month in Portugal?” Andrae said Wednesday. “Our data already shows during the crisis that this was a trend, and it will also persist in the future.”
Who is behind the company?
Founded in 2014 by Andrae and partner Wolfgang Heigl, it employs over 350 people and runs 23 local apps and websites across Europe, North and South America, Australia and the Asia-Pacific region. Based in Berlin, the company also operates the brands Tripping.com, Casamundo and Wimdu.
Along with Lakestar, the company counted venture capital firms DN Capital, Global Founders Capital and Insight Venture Partners among early investors. Chairman of the Board, Christoph Schuh, Managing Director of Lakestar in Germany, with more than 10 years of experience as an active investor and advisor for travel companies, oversees the four-person management team. HomeToGo also counts Airbnb’s former director of international operations, Martin Reiter, as a board member and investor.