Investors’ appetite for Skyscanner will be put to the test following reports that its largest shareholder is preparing to offload a 10 per cent stake in the flight comparison website.
Scottish Equity Partners (SEP) is said to have appointed Goldman Sachs to handle the sale, with bids due this week. Offers are expected to confirm the $1 billion valuation attributed to Edinburgh-based Skyscanner for the past several months.
A deal of that magnitude will raise speculation about a possible flotation, something co-founder and chief executive Gareth Williams has spoken of in the past. He has previously stated that the company would need to reach annual sales of £100 million before going to market.
Last year, Skyscanner generated revenues of £93m, up 42 per cent on 2013. Pre-tax profits at the company, which makes most of its money from airline referral fees, were £12.6m.
Bidders for SEP’s stake could include Baillie Gifford, the Edinburgh-based pension fund manager. Last month it put £55m into German start-up Hello-Fresh, an online food delivery service.
Skyscanner’s current push into Asia could also attract investors from that part of the world, with Temasek, the sovereign wealth fund of Singapore, thought to be interested. Japan’s Softbank is also rumoured to be among the potential buyers.
SEP first backed Skyscanner in 2008 with a £2.5m first-round funding injection, giving it a stake in the business of more than 40 per cent. That was diluted to an unconfirmed extent by Sequoia Capital of California, whose investment in 2013 took Skyscanner’s valuation to roughly $500m.
Set up in 2003 by Williams and co-founders Barry Smith and Bonamy Grimes, more than 80 per cent of Skyscanner’s users are from outside the UK. An average of 40 million people use the service every month to locate the cheapest flights, hotels and car hire deals.
It launched a joint venture earlier this year with Yahoo Japan, the country’s leading online portal, in which the two are sharing technology to take control in the world’s third-largest travel market.
The Scottish firm, which employs more than 580 people in nine offices around the world, has also been expanding its presence in China following last year’s acquisition of travel search company Youbibi.