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Vacation Rental Company Vacasa to Go Public This Fall Via SPAC Merger With TPG Pace Solutions

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The Covid delta variant is not stopping travel company Vacasa from going public.

Riding the vacation rental boom, Vacasa is set to go public this fall through a merger with TPG Pace Solutions, a special purpose acquisition company. The $400 million transaction would give the Portland, Oregon based company a $4.5 billion valuation.

Vacasa CEO Matt Roberts tells CNBC no existing investors will sell shares.

The timing of Vacasa's debut comes as the broader travel and hospitality industry is assessing the impact of the delta variant on travel bookings and whether customers will cancel future plans. 

So far, Roberts says he has not seen any impact thus far on bookings. If anything, demand has accelerated in recent weeks as more travelers enjoy the summer. Roberts is projecting $1.6 billion in gross bookings for 2021.

"The industry in total is experiencing significant demand such that occupancy rates are super high," said Roberts.

An increase in homeownership and a surge in vacation rental bookings have helped Vacasa's business thrive over the last year.

In addition to listing properties on its site, Vacasa offers thousands of clients access to property management tools and booking solutions to manage short-term rentals.

"There is a new cohort of guests who understand that you can actually get the hospitality you get at a hotel… in a home," said Roberts.

Vacasa partners with rental sites Airbnb, VRBO and Booking.com.

CNBC reported in April that Vacasa was considering going public via SPAC and held meetings with Social Capital's Chamath Palihapitiya and Altimeter Capital's Brad Gerstner.

Vacasa ultimately picked TPG, which was an early investor in Airbnb, Uber, Norwegian Cruise Lines among other travel and transportation companies. TPG Pace Group alone has sponsored seven SPACs.

"Part of the reason to do this transaction is to get more capital on the balance sheet, to increase our lead. And that means getting more homes and to continue to build out the tech stack to drive more product differentiation," said Karl Peterson, non-executive chairman and director of TPG Pace Solutions and managing partner of TPG Pace Group.

Roberts says Airbnb's IPO in late 2020 put the vacation rental industry on the map and motivated him to start pursuing options for Vacasa.

"Airbnb was a great mark for the industry and validated the alternative accommodation space," added Roberts.

Roberts plans to use the funds raised to more than triple his investments in technology and his staff to better serve customers.

While the highly contagious variant may not be affecting Vacasa's business as of now, Peterson is keeping a close eye on the effect it could have on the economy.

"The biggest headwind is continued confidence in the reopening of the travel economy… you'd like to see us all moving forward, not backwards with respect to mask mandates and as vaccination rates continue to rise here."

Vacasa's existing investors include Silver Lake, Riverwood Capital and NewSpring. The company will list under the symbol "VCSA."

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