GIC-backed Traveloka nears fresh fund raising at lower valuation

Traveloka is one of the first unicorns in South-east Asia to experience a down-round. PHOTO: TRAVELOKA/FACEBOOK

SINGAPORE (BLOOMBERG) - Traveloka, South-east Asia's biggest online travel start-up, is close to raising fresh funds at a private-market valuation of about US$2.75 billion - roughly 17 per cent less than its most recent fund raising, according to people familiar with the matter.

The Jakarta-based firm is in advanced negotiations with new strategic investors such as Siam Commercial Bank and Richard Li's FWD Group, as well as existing backers GIC and East Ventures to secure about US$250 million (S$348.8 million), the people said. The primary fund raising will be at a US$2.75 billion valuation, while a secondary sale will be at US$2.4 billion, one of the people said. Traveloka counts online travel site Expedia Group and among its existing backers.

Terms of the fundraising could still change, they said. A Traveloka representative declined to comment.

Traveloka, which has had its business hammered by the coronavirus fallout, is one of the first unicorns in South-east Asia to experience a down-round - raising funds at a lower valuation than the previous funding round. It reflects the sharp drop in business after lockdown orders halted flights and travel. Since the outbreak, the company has cut an unspecified number of positions, including about 80 jobs in Singapore in April.

The travel industry is witnessing a sharp decline in business since the spread of the coronavirus. Expedia saw its total gross booking fall 39 per cent in the first quarter, while its share price has dropped 21 per cent this year. Vacation-rental start-up Airbnb cut 25 per cent of its workforce and raised an additional US$2 billion in debt to help weather the downturn.

Despite the slump, some Traveloka investors are betting on the travel industry's eventual recovery, led by a rebound in tourism within countries, and a series of cost-cutting measures at the company, one of the people said. In Vietnam - a model case in containing the pandemic with fewer than 400 cases and no deaths - domestic travel has restarted.

With a population of 570 million and growing middle class, South-east Asia's six largest economies are expected to see their online travel market more than double from US$34 billion in 2019 to US$78 billion in 2025, according to the most recent report by Google, Temasek and Bain released in October.

Since its inception in 2012, Traveloka's valuation climbed to US$3.30 billion, according to the people. It has expanded across South-east Asia, making it easier for consumers to book flights and hotels across countries. Like other start-ups in the region, Traveloka followed a popular playbook of providing multiple products and extending into financial services to complement its travel, accommodation and lifestyle offerings.

Traveloka chief executive officer Ferry Unardi said in an interview at the New Economy Forum in Beijing in November that the company is considering an initial public offering in Indonesia and in the US in two to three years.

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