Six weeks ago, Goldman Sachs’ tech bankers were preparing Airbnb for its stock-market debut. Investors in the travel firm would be able to sell their shares on an open market, providing a clear window into what Airbnb was worth. Instead, as coronavirus halted travel around the world, Airbnb’s revenue began evaporating. The company enlisted its bankers, Goldman Sachs and Morgan Stanley, to help raise $2 billion of debt, at high rates.
Among private tech companies, Airbnb is an outlier so far. Few have turned from the equity markets to debt investors during the pandemic. Nick Giovanni, a top Goldman Sachs tech banker, expects that to change soon. But he cautioned that future deals for private tech firms might look different from the deal Airbnb struck. Instead, he anticipates a rise in private convertible debt, where lenders are able to convert their loans into equity down the road.