After nearly 2 years in the pipeline, travel website Kayak is finally ready to set sail as a public company. The Connecticut-based consumer Internet giant is beginning its 10-day marketing blitz, known as a roadshow, which will pitch to investors in Silicon Valley, Boston, and New York among other hotspots, according to a person familiar with the matter.
But thanks to recent market events, the company, which is aiming to price its IPO on July 19, may have to navigate some potentially treacherous waters in order to pull off a successful offering — and based on how the deal is structured, bankers and management are doing everything they can to keep this deal from running aground.
In addition to offering 3.5 million shares to the public (which is in line to raise roughly $82 million at a valuation of about $1 billion), the company has also ear-marked roughly $9 million in shares which has been pre-sold to a group of insiders as part of a private placement — a move which IPO bankers say can be used to help bolster confidence on deals being priced in shaky markets. Kayak was previously expected to raise up to $150 million, valuing the company at more than $1 billion.
What’s more: While most IPOs are used as an opportunity for a company’s management and its early backers to liquidate a portion of their holdings, Kayak’s insiders are using the deal to actually buy more shares. It’s a strong endorsement from its existing stockholders — which include some of Silicon Valley’s most prominent investors like Accel Partners (one of Facebook’s cornerstone investors), and Sequoia Capital (an early investor in Apple , Google , Yahoo! and others). It’s a clear signal to investors: we’re here as buyers (which could help keep the stock stable).
But perhaps most notable: Bankers are purposefully keeping this offering small by limiting the size and scope of shares being offered to the public. Typically, companies that go public offer two sets of shares in an IPO (a group of “primary” shares created specifically for the deal, and another group of “secondary” shares which come from existing stakeholders). In Kayak’s case, the company is only selling primary shares — a decision which was partially motivated to help ensure there wasn’t an oversupply of shares, according to a person familiar with the matter.
Kayak is also taking advantage of a recently-enacted JOBS Act provision which allows some emerging growth companies to keep financial information out of public filings. For a company with a somewhat shaky earnings history, less disclosure could be beneficial, especially on the road as it faces questions about its future growth and past performance.
A spokesperson for Kayak declined to comment on the company’s IPO.
— By CNBC’s Jesse Bergman
CNBC and Yahoo! have a business alliance to share and co-produce editorial content.