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January 28, 2012 12:12 am
Facebook plans to set the wheels in motion next week for its hotly anticipated debut on Wall Street, laying the groundwork for what is expected to be the biggest initial public offering ever by a technology company.
The US social networking company, which claims more than 800m active users, is hoping to file details of the listing as early as Wednesday, according to one person familiar with its thinking. Another person indicated that the filing with the Securities and Exchange Commission, which will provide the first sight of Facebook’s finances, was “imminent”, but would not confirm the midweek target date.
While one person warned that the deadline could still slip due to unexpected problems with the company’s regulatory filing or external news, the provisional date is the first indication that Facebook is close to taking the long-awaited step to becoming a public company. A share sale is expected to be launched in May and is set to raise as much as $10bn, dwarfing the $1.9bn raised by Google at its own IPO in 2004.
Expectations among some Facebook investors that a stock market listing would put a $100bn price tag on the company have faded somewhat amid recent stock market volatility and the poor performance of other internet IPOs. Facebook’s shares have been changing hands in private secondary markets at levels valuing the company at about $80bn, and the company could be worth anything from $75bn-$100bn by the time it reaches Wall Street, according to the person familiar with its plans.
“This has the feel of the Google IPO, coming at a time when the rest of the world is not in the midst of a great boom, but they are,” said Kevin Landis, chief investment officer of Firsthand Technology Value Fund, a publicly listed company that owns Facebook shares. “If the market looks weak when they start trading, they’ll float a modest amount and wait to sell more later.”
Facebook’s slow but deliberate move towards an IPO touched off a scramble among Wall Street banks for the privilege of leading the highly profitable and high-profile deal. Morgan Stanley was expected to be named lead underwriter and given the greatest share allocation in the sale, though a final decision had not been made late on Friday.
People familiar with the situation said Facebook was prepared to file for an IPO without listing banks. Goldman Sachs was also expected to be given a prominent role in the transaction, with other banks in supporting roles, these people said.
Facebook was created in a Harvard University dorm room eight years ago, quickly growing from a social distraction for students to a utility that is reshaping the internet. Not since Google has an internet company created an online service that became such an integral part of peoples’ regular internet habits and daily lives.
Mark Zuckerberg, who is due to turn 28 in May, and his early collaborators set out to reorganise the internet from a web of information to a place that reflected the social web of real life. Despite intense early scepticism in financial circles about whether social networks would ever make money, advertising has followed users and Facebook is estimated to have generated revenues anywhere from $3bn to $6bn last year.
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