February 1, 2012

Facebook poised for US$5 to US$10 billion IPO (PHOTO)

FUND-RAISING TARGET: The reception area at Facebook headquartersis. Facebook is poised to file papers for an IPO seeking to raise at least US$5 billion.

NEW YORK: Eight years after its launch, social networking giant Facebook is poised to file papers for an initial public offering seeking (IPO) to raise at least US$5 billion.

The prospectus for an IPO could be filed with the US Securities and Exchange Commission (SEC) as early as yesterdaymorning, according to US media reports, although they stressed there was still a possibility it could be delayed.

The Wall Street Journal broke the news of Facebook’s impending IPO last week, saying the Palo Alto, California-based company planned to raise US$10 billion at a valuation of between US$75 billion and US$100 billion.

The US$10 billion target had been halved to a more conservative US$5 billion in reports emerging in The New York Times and International Financing Review.

The publications stressed, however, that US$5 billion was only a preliminary fund-raising target and could always be raised after gauging investor interest.

The initial IPO filing was not expected to specify how many shares were being offered or their list price.
It would also not put a valuation on the company nor identify which exchange Facebook shares would be traded on – the Nasdaq stock market or the New York Stock Exchange.

In any case, Facebook shares were not expected to begin trading until at least May, once the IPO process was finalised.

With a deal size of US$10 billion, Facebook would slip into sixth place on the list of largest US IPOs between AT&T Wireless Group (US$10.62 billion) and Kraft Foods (US$8.68 billion), according to Renaissance Capital.

Even at US$5 billion, it would still be the largest IPO ever by a US Internet company, surpassing that of Google which raised US$1.9 billion in 2004 and valued the Web search giant at US$23 billion.

A market capitalization of US$100 billion would put Facebook on a par with McDonald’s (US$101 billion), well ahead of Boeing (US$55 billion) but behind Apple (US$426 billion) and Google (US$189 billion).

A Facebook IPO would be “the biggest financial event in the tech industry for 2012,” Forrester Research analyst Josh Bernoff said, and would eclipse those of several other Internet companies that went public in 2011.

Career-oriented social network LinkedIn was undervalued while online daily deals site Groupon and social games titan Zynga had both been trading at or below their list price.

Facebook chief executive Mark Zuckerberg had deflected IPO talk for years, saying he was focused on building the company and not on going public.

But Zuckerberg, who launched Facebook from his Harvard University dorm room in February 2004 and had seen it grew to more than 800 million members, had recently seemed to bow to the inevitability of selling stock to the public.

Morgan Stanley was expected to be the lead bank for the IPO and IFR said Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan would also play a role.

According to eMarketer, Facebook’s global revenue was US$4.27 billion last year, mostly from online advertising. — AFP

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