Lyft aims for valuation near $20B; GM's stake may top $1.2B

SAN FRANCISCO -- Lyft Inc. is seeking to raise as much as $2.1 billion in its initial public offering, valuing the firm at almost $20 billion.

The No. 2 U.S. ride-hailing giant is offering 30.8 million shares at $62 to $68 each, it said in a regulatory filing Monday. At the top of that range and including a potential overallotment of shares to investors the market valuation would reach $19.6 billion, based on the total numbers of shares outstanding after the IPO as detailed in the filing.

At the targeted range, the San Francisco-based company’s offering will be the biggest from a tech upstart since Snap Inc. went public two years ago, and the largest in the U.S. so far this year after the partial U.S. government shutdown put a damper on first-quarter listings.

Lyft’s management and advisers will hit the road this week to start marketing the stock to potential investors, passing through cities including New York, Boston, San Francisco and Los Angeles, according to terms of the deal reviewed by Bloomberg. The shares are set to price on March 28 and start trading on the Nasdaq Global Select Market the following day.

Including some restricted equity units for employees and others that aren’t yet fully available to them, Lyft’s valuation could reach as much as $23.3 billion, according to data compiled by Bloomberg. Lyft had earlier been aiming for a valuation of $20 billion to $25 billion.

Ahead of Uber

The filing with the U.S. Securities & Exchange Commission puts Lyft further ahead in its race to go public with Uber Technologies Inc., the world’s biggest ride-hailing company. Uber has filed confidentially with the SEC and intends to make its listing plans public in April, according to people familiar with the matter. Smaller startups including Postmates Inc. and Slack Technologies Inc. are also considering going public in what’s shaping up to be a burst of tech listings this year.

Italian payments firm Nexi SpA is planning to raise as much as 2.7 billion euros ($3.1 billion) on the Milan stock exchange next month, according to people familiar with the matter, in an offering expected to be the world’s biggest so far this year. Though the amount raised is likely to be higher than Lyft, the ultimate valuation of Nexi will be much lower: The listing could give the company an enterprise value of about 7 billion euros, the people said.

Uber’s listing is expected to be the biggest of the year, and could value the company at as much as $120 billion, people familiar with its plans have said previously. That would also likely make its offering one of the top five of all time.

Profitability question

While Uber is pursuing food and freight delivery, scooters, electric bikes and even flying cars, Lyft remains focused on transportation, including bikes and scooters. Lyft warned in its filing that expenses are likely to increase and that it may not be able to “achieve or maintain profitability in the future.”

The new filing spells out how much of Lyft will be controlled by co-founders Logan Green and John Zimmer once the company is public. The two will be issued Class B shares, which will equal the voting rights of 20 ordinary shares. They will hold a combined 49 percent of voting power after the offering, with Green holding 29.31 percent and Zimmer holding 19.45 percent, the filing shows.

Lyft has applied to list shares on the Nasdaq Global Market under the symbol “LYFT.”

One of the big winners in the stock offering could be General Motors, whose stake in the ride-hailing firm could be worth as much as $1.27 billion.

GM is not talking about its plans for that investment, but some investors believe the No. 1 U.S. automaker should hold on to it for strategic reasons, while others want the money returned to shareholders through buybacks or a special dividend.

"Unless GM can leverage its investment in Lyft to accelerate its own robo-taxi ambitions with Cruise, we believe it would be appropriate to cash out its stake to repurchase its own under-valued shares," said Michael Razewski, a partner with Douglas C. Lane & Associates, which owned about 2.6 million GM shares at the end of 2018.

Cruise Automation is GM's self-driving car unit.

GM owns more than 18.6 million Class A shares, according to the Lyft filing, meaning its investment at the outset could be worth $1.16 billion to $1.27 billion. GM invested $500 million in Lyft in January 2016.

With a 180-day lock-up period during which GM cannot sell and the expected April IPO of larger rival Uber Technologies Inc. further stoking interest in the ride-hailing sector, the value could subsequently rise.

GM spokesman Tom Henderson said the automaker is happy with its Lyft stake, but declined to discuss future plans for the shares. Lyft spokeswoman Alexandra LaManna had no comment.

Several shareholders would like to see GM sell the stake and use the proceeds to repurchase shares or pay a special dividend.

"If I want to buy Lyft, I'll go do it myself," said Scott Schermerhorn, managing principal with Granite Investment Advisors, which owns more than 210,000 GM shares. "Take the proceeds and invest it in something that's core to their business or give it back to shareholders."

However, Jacques Elmaleh, portfolio manager with Steinberg Global Asset Management, with almost 24,000 GM shares at the end of 2018, said it is too early to write off the relationship.

"I'd be inclined that they hold onto it and see how it plays out," he said.

Some of GM's larger investors -- the UAW retiree healthcare benefits trust, hedge fund manager David Einhorn and T. Rowe Price Group Inc. -- declined to comment. Warren Buffett's Berkshire Hathaway Inc. did not respond to a request for comment.

What about Cruise?

GM's former president, Dan Ammann, joined Lyft's board as the companies eyed developing networks of self-driving cars together. However, there have been few signs of cooperation. Ammann -- who now leads Cruise -- left the Lyft board in June 2018.

Analysts have speculated GM will eventually sell shares in Cruise or spin it off, and the incentive plan disclosed last month for Ammann pointed toward a possible IPO.

Kyle Martin, analyst with Westwood Holdings, which owns more than 30,000 GM shares, would just as soon see GM sell the Lyft stake and use that money in Cruise.

"That's a meaningful amount of money that could certainly help them close the gap with Waymo and put them even further ahead of Ford," he said, referring to technology leader Alphabet's Waymo and GM rival Ford Motor Co.

Bloomberg and Reuters contributed to this report.