Lyft seeks $23bn valuation in New York IPO
Ride-hailing company looks to raise $2.1bn in biggest US tech listing in 2 years
Lyft, the ride-hailing company, is hitting the road to pitch the biggest US technology listing in two years, as it looks to raise up to $2.1bn at a valuation of almost $23bn.
The San Francisco-based company suggested a price range of $62 to $68 per share in an updated filing on Monday to the US Securities and Exchange Commission, as it kicked off its investor roadshow. It will use the ticker symbol LYFT when it begins trading on the Nasdaq exchange later this month.
A $22.9bn valuation, at the top of the range and on a fully diluted basis, would peg Lyft’s worth in the range of the market capitalisations of public tech companies including Hewlett Packard Enterprise, Twitter and AMD, as well travel groups Hilton and Expedia. It would be the biggest offering by a US tech group since Snap went public in 2017, according to Dealogic.
The filing gives the first indication of what ride-sharing companies could be worth in the public markets. Lyft’s IPO is expected to be followed by a public listing from its larger rival Uber as soon as next month, which may fetch a market valuation topping $100bn.
Stuart Bedford, a corporate partner at the law firm Linklaters, said it was hard to value Lyft, since there is no predecessor to compare it to.
“The fact is that they (ride-hailing apps) are not ‘steady state’ businesses, they are all still driving for significant further growth and the battle being fought in the ride-hailing space means it remains hard to predict future revenues,” he said.
But one investor who holds a stake in Uber said the offer was tempting. “I think this is going to trade very well and that will bode very well for Uber.”
The listing will kick off what is expected to be a busy period for technology IPOs with other Silicon Valley stars including Pinterest and Airbnb waiting in the wings.
In Monday’s filing, Lyft said it would offer 30.8m shares, while underwriters have the option to purchase an additional 4.6m shares. JPMorgan, Credit Suisse and Jefferies are the lead bookrunners for the offering.
After expenses, Lyft expects to see net proceeds of about $1.9bn, rising to as much as $2.2bn if the underwriters exercise their purchase options.
About 5 per cent of the shares will be offered for sale to some of its longest-serving drivers, who have completed more than 10,000 rides through its app, as well as to Lyft’s directors, certain employees and their friends and family.
At a price of $68 per share, Lyft’s two co-founders, Logan Green and John Zimmer, would see the values of their stakes rise to $569m and $393m respectively.
They also plan to create a new class of shares carrying 20 votes a piece, which will give them control of 48.8 per cent of voting power, despite their ownership of less than 5 per cent of the company.
Lyft’s largest shareholder, Japanese ecommerce company Rakuten, will hold a stake worth $2.13bn at the high end of the price range. It originally paid $300m for 11.9 per cent of Lyft in 2015 and invested in additional private rounds in 2016 and 2017.
General Motors, which invested $500m in 2016, will have a stake worth $1.27bn. Among other top shareholders, Fidelity’s stake will be worth $1.26bn, venture capital firm Andreessen Horowitz will own a stake worth $1.02bn and Alphabet’s holdings will be worth $872m.
Lyft, which was founded in 2012 and operates in more than 300 cities in the US and Canada, had revenues in the past year of $2.16bn and a net loss of $911.3m.
Lyft kicked off its roadshow in New York on Monday. Executives and bankers will travel to Boston, Baltimore, San Francisco, Los Angeles, Kansas City and other cities to meet potential investors, according to a schedule seen by the Financial Times. The shares are expected to price on March 28 and begin trading the next day.
The company’s case to investors will emphasise growth, particularly the increases in active riders and revenue per active rider, according to a video presentation for investors.
The number of active riders — people who have taken at least one ride in the past quarter — rose more than fivefold from 3.5m in early 2016 to 18.6m at the end of 2018. Revenue per active rider more than doubled to $36.04 in that time.
“This is a key indicator of our ability to drive usage and monetisation of our platform,” said Brian Roberts, Lyft’s chief financial officer, in the video.
Costs have also increased substantially, however, tripling to $3.1bn last year from 2016.