Despegar.com Raises $332 Million in Argentina’s First IPO of 2017

This is only the third IPO held by an Argentinian company since 2015. According to analysts, more deals involving Argentinian companies are expected to happen soon. Additionally, the IPO boosted Despegar’s market value to approximately $1.8 billion dollars, officially making it a unicorn.

Despergar, however, is not the only company from Argentina to have attained  unicorn status. Founded in 1999, Mercado Libre has annual revenues of about $4 billion, while the software company Globant, established in 2003, is worth approximately $1.7 billion.

About Despegar.com:

Established in Argentina in 1999, the website is a search engine which allows users to locate the best travel deals, compare prices and purchase vacation packages. From January  to July 2017, the company registered revenue of $248.5 million.

The Strategy: 

Despegar’s IPO comes as the economy of its two major markets, Brazil and Argentina, recover. These two countries are responsible for 41% and 25% of Despegar’s revenue, respectively. With the improvements in the economies of these nations, more people have the money to spend on tourism, and Despegar aims to benefit from this situation.  

"This year has been an inflection point in terms of consumption, and all categories are improving – travel is no exception. We’re using these funds to focus on financing the growth of our business, hiring more people on our IT team, and to increase the number of hotels, tourist packages and vacation rentals we offer in Latin America,” said Damian Scokin, CEO of Despegar.

Next steps:

As for the future of the company, it intends to grow in Mexico and Colombia, by increasing the number of travel packages and sales it offers to these locations. However, the CEO claimed that acquiring or merging with another enterprise is not in his plans for the foreseeable future.

"Investors are seeing the potential in a company that’s exposed to Latin American consumption trends that are going through a cyclical recovery period," said Delphos analyst Manuel Terre. "We expect the company’s gross bookings to grow at attractive rates,” Mr. Scokin added.

The IPO involved three law firms working with the Argentine company. Simpson Thacher & Bartlett LLP in the United States of America, TozziniFreire Advogados in Brazil and Estudio Beccar Varela in Argentina.

C.S.