• In talks to raise EUR 50m in debt financing
• Considers pre-IPO round in 2024

Habyt Group (Habyt), a German co-living services provider, will use part of its recently raised EUR 40m Series C round to finance acquisitions, founder and CEO Luca Bovone told Mergermarket.

The company, which is in advanced talks with two acquisition candidates, one in North America and one in Asia, aims to close two deals in the next twelve months, Bovone said. Habyt aims to acquire 100% of an acquisition target, he added.

Habyt, which forecasts EUR 200m annual recurring revenue for this year, looks at targets generating revenues between EUR 15m and EUR 30m, located in the US, Canada, Hong Kong, Singapore, Japan, Australia and South Korea, he said.

The company manages its M&A activities in-house and is in contact with several M&A advisors, he said. Its legal counsel is BMH, he added.

The required investment to buy the two companies with which it is in talks could be around EUR 60m, Bovone said, adding that Habyt will use debt financing to finance deals alongside part of the Series C.

The company is in talks with banks and other counterparties to raise EUR 50m in debt financing, he said, which includes EUR 15m to refinance Habyt’s current debt.

The next financing step could be a pre-IPO round towards the end of 2024, in preparation for a listing at the end of 2025, he said. A pre-IPO round would allow Habyt to take on board some anchor investors, he said, although no decision has been made at this point.

Habyt is working with KPMG on an audit of its balance sheet in preparation for a potential IPO, he said. The appointment of an investment bank will be a topic for 2024, he said, adding that it is too early to discuss details.

At the time of the IPO, Habyt expects to be profitable and have a valuation of approximately EUR 1bn, he said. Before the Series C it was valued at approximately EUR 300m, he added.

According to Mergermarket‘s Likely to Exit (LTE) predictive algorithm*, Habyt has a score of 26.

Its investors include Korelya Capital, Deutsche Invest, Exor Ventures, Endeavor Catalyst, P101, Vorwerk Ventures, Kinnevik.

In addition to funding acquisitions, Habyt will invest part of the Series C proceeds to restructure and bring to profitability the New York-based co-living operator Common Living it acquired in January, Bovone said, adding that this is the group’s seventh acquisition. In 2022, it acquired Singapore-based flexible living company Hmlet.

Habyt forecasts annual recurring revenue of EUR 300m for 2024, he said. Its European business is growing organically at 40% annually and is profitable, and the Asian business is at break-even, is growing by 50% to 60% annually, and expects to reach a 100% growth rate next year, he said. The US subsidiary is expected to reach a growth rate of 100% in the coming months, and be profitable in the first quarter of next year, he added.

Founded in 2017, Habyt offers fully furnished and serviced, private and shared accommodation, easily accessed by customers, allowing them to move quickly between countries; and has 30,000 units across 50+ cities. Bovone described the business as being “like a member’s club”; it offers a subscription model, charging a monthly fee that covers rent, and clients can apply for rooms elsewhere and move from one place to another, as reported.

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.