International hospitality company Selina, which was founded in 2015 by Israeli entrepreneurs Rafael Museri and Daniel Rudasevski, is on its way to a Wall Street flotation at a valuation of $1.2 billion. The plan for the company to go public through a merger with BOA Acquisition Corp. by mid-2022. Among the investors in the Selina network of hostels are Ronald Cohen, More Capital, Gigi Levy, Shaul Shani and Adam Neumann. The merged company will operate under the name Selina Hospitality plc, and its ordinary shares are expected to be listed on the New York Stock Exchange under the ticker symbol SLNA.
Selina is not concerned about the SPAC listing method, which has not worked out well for many companies, arguing that many companies that were not ready to come to the public market chose that route. Its management sees Selina as a strong global brand with high revenue, and the SPAC method as a legitimate and good product for reaching the US market.
The network is active in 23 countries on four continents. It deals both in hospitality and in cultural content for its customers. Sources at the company explained that a large part of its revenue, estimated ay a t least $100 million annually, comes from the "community", and not from rooms. The company believes that becoming publicly traded will enable it to grow and expand to more destinations and to reach new target markets. It also sees itself operating in more countries in the Middle East, and in Australia and Thailand.
In each Selina hostel there is "democratization of rooms". There are both shared and private rooms at various price levels. The network employs nearly 250 people in Israel, and estimates that this number will grow to at least 400 by the end of next year. The development center is in Israel, and the company says that it will remain here. Its management offices are divided between Israel, London, and New York. Twelve new Selina hostels are expected to open in Israel in the coming year. The company recently signed an agreement with Israeli real estate company Hagag Group, making it its main partner in Israel.
Selina has secured $350 million of committed capital from partners to expand its offering in 12 geographies, which is expected to add approximately 40,000 new beds to the Selina network by 2025. In addition to its pay-as-you-go offering, Selina has introduced an innovative subscription service-Nomad Passport-that allows guests to stay at any Selina location for as long as they like, with full amenities including accommodation, co-working, wellness activities and locally curated events.
Selina stresses that its lifestyle brand was developed for millennials and Gen-Z backpackers and tourists, a group that the company estimates spends $350 billion annually on travel.
Selina has secured $350 million of committed capital from partners to expand its offering in 12 geographies, which is expected to add approximately 40,000 new beds to the Selina network by 2025. In addition to its pay-as-you-go offering, Selina has introduced an innovative subscription service-Nomad Passport-that allows guests to stay at any Selina location for as long as they’d like, with full amenities including accommodation, co-working, wellness activities and locally curated events.
Under the terms of the BOA transaction, a group of institutional investors including South Light Capital (an affiliate of DigitalBridge), More Investment House and Sir Ronald Cohen, alongside BOA’s sponsor and founder-led stockholders, have committed $70 million of capital, which includes a $15 million minimum equity backstop from BOA’s sponsor. Of the total, $10 million will be an advanced PIPE funded concurrent with the announcement, strengthening Selina’s balance sheet as it rolls out new sites. There is approximately $230 million currently held in BOA’s trust account. Subject to any redemptions by BOA stockholders, existing Selina shareholders will retain approximately 71% ownership in the combined company.
The business combination is expected to provide Selina with $285 million (assuming no redemptions) of gross transaction proceeds. The company says that it will use proceeds from the transaction to fuel its expansion across large urban markets globally, as well as invest in its proprietary technology and attract and retain high-quality talent.
Selina expects to report positive EBITDA in the first quarter of 2023, and to reach annual revenue of $1.2 billion in 2025.
Selina's operating model is based on cooperation with real estate owners, who on average pay 90% of the cost of converting their assets into Selina-branded destinations. The boards of directors for both Selina and BOA have unanimously approved the business combination. The transaction will require the approval of the stockholders of BOA and Selina and is subject to other customary closing conditions. The transaction is expected to close in the first half of 2022. PJT Partners is acting as financial and capital markets advisor to Selina, and BofA Securities Inc. is acting as capital markets advisor. Morgan, Lewis & Bockius LLP is acting as legal advisor. PJT Partners, UBS Investment Bank and BTIG LLC are acting as joint placement agents on the private placement. UBS Investment Bank is acting as the lead capital markets advisor to BOA, while BTIG LLC is acting as capital markets advisor and King & Spalding LLP is acting as legal advisor.
"Millennials and Gen-Z travelers are looking for authenticity and top-tier experiences at every step-they want to be immersed in the local culture of each location they visit," Museri said. "By partnering with local artisans to design culturally relevant and inspiring destinations, we’re creating opportunities for them to forge lifelong connections within the rapidly expanding Selina community. We’ve spent the last six years building and scaling an efficient and differentiated platform, and this transaction will enable us to bring Selina to more locations and travelers across the world."
Published by Globes, Israel business news - en.globes.co.il - on December 2, 2021.
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