Facebook IPO: Company Expected To File S-1 Seeking $5 Billion On February 1, IFR Reports
By Anthony Hughes and Stephen Lacey
NEW YORK (Reuters) - Facebook is expected to submit paperwork to regulators on Wednesday morning for a $5 billion initial public offering and has selected Morgan Stanley and four other bookrunners to handle the mega-IPO, sources close to the deal told IFR.
The company founded by Mark Zuckerberg in a Harvard dorm room in 2004 picked Morgan Stanley to take the coveted "lead left" role in what is expected to be the largest IPO ever to emerge from Silicon Valley.
The $5 billion is a preliminary target and could be ramped up in coming months in response to investor demand, IFR added.
The other four bookrunners chosen were Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan, although the underwriting syndicate could be expanded later, IFR cited the sources as saying.
Facebook declined to comment on the report by IFR, a unit of Thomson Reuters. "Lead left" refers to where the top underwriter's name will appear on the IPO prospectus.
The preliminary IPO filing sets the stage for a May market of the world's largest social network, IFR reported, a coming-out party that will dwarf almost any before that, including Google Inc's $2 billion IPO.
IPO VETERAN CLINCHES DEAL
Morgan Stanley's experience in arranging major Internet IPOs - including those of Groupon and Zynga - helped it clinch a pivotal role after an unusually secretive selection process, IFR reported.
Final pricing would not be set for several months, during which the size of the IPO could be increased should investor demand warrant it, IFR added.
The prospective IPO - expected to be one of the largest U.S. market debuts in history - has whipped up a frenzy of investor and media speculation this month, buoying shares in social media peers from RenRen to LinkedIn and igniting fierce competition on Wall Street.
The IPO - a prized trophy for any investment bank - likely set a new standard for how low its arrangers are willing to go on advisory fees to win big business, analysts say.
Silicon Valley start-ups from Zynga and LinkedIn to Groupon and Pandora Media Inc have since last year begun testing investor appetite for a new wave of dotcoms, with mixed results.
Investors last year had warned of a second dotcom bubble inflating, after LinkedIn doubled on its debut; but the so-called over-enthusiasm has waned in recent months.
The last dotcom player to debut, Zynga, closed 5 percent below its IPO price during its first trading day in December.
(Writing by Edwin Chan)
Check out the slideshow (below) to see how Facebook's IPO might compare with other huge tech IPOs from 2011.
Zynga: $1 Billion
Social gaming company Zynga raised $1 billion in its IPO in December, 2011, the biggest web-related IPO since Google, <a href="http://www.huffingtonpost.com/2011/12/16/znga-ipo-nasdaq_n_1153518.html?ref=technology" target="_hplink">according to the Associated Press</a>. Zynga had a valuation of $7 billion before it began trading on the Nasdaq on December 16.
RenRen: $743 Million
RenRen, the Chinese social networking site, raised $743 million in its IPO in May 2011, <a href="http://www.reuters.com/article/2011/05/04/us-renren-ipo-idUSTRE7433HI20110504" target="_hplink">according to Reuters</a>. At the end of its first day of trading, the company had a market value of $7.4 billion. As of December 16, 2011, RenRen's market capitalization stood at $1.34 billion.
Groupon: $700 Million
The daily deals site <a href="http://www.huffingtonpost.com/2011/11/04/groupon-ipo-biggest-since-google_n_1075374.html" target="_hplink">raised $700 million in its IPO</a> in November 2011, valuing the company at nearly $13 billion. As of December 16, 2011, Groupon's value was $14.4 billion.
LinkedIn: $352 Million
LinkedIn, the professional social network, <a href="http://www.huffingtonpost.com/2011/05/23/linkedins-linkedin_n_865406.html" target="_hplink">raised $352 million</a> in its IPO in May 2011. According to Reuters, the company was worth $9 billon after its first day of trading on the public market. As of December 16, 2011, <a href="http://www.dailyfinance.com/quote/nyse/linkedin-corp/lnkd" target="_hplink">LinkedIn's value had dropped</a> to $6.35 billion.
Pandora: $234 Million
Internet radio site Pandora raised $234 million when it went public in June 2011, valuing the company at $2.56 billion, <a href="http://blogs.wsj.com/venturecapital/2011/06/14/pandora-ipo-prices-at-16-well-above-range/" target="_hplink">according to <em>The Wall Street Journal</em></a>. As of December 16, 2011, the company had a market value of $1.71 billion.
HomeAway: $216 Million
HomeAway.com, a vacation home rental site, raised $216 million in its IPO in June 2011, <a href="http://www.marketwatch.com/story/homeaway-ipo-raises-216-million-2011-06-29" target="_hplink">according to MarketWatch</a>. In its first day of trading, <a href="http://techcrunch.com/2011/06/29/homeaway-ipo-shares-pop-39-percent-market-cap-reaches-3-billion/" target="_hplink">reports TechCrunch</a>, the company had reached a valuation as high as $3 billion. As of December 2011, <a href="http://www.dailyfinance.com/quote/nasdaq/homeaway/away" target="_hplink">HomeAway had a market cap</a> of $1.89 billion.
Demand Media: $151 Million
Demand Media, a web content company, or "content farm," <a href="http://www.huffingtonpost.com/2011/10/10/2011-ipos-are-underwater_n_976291.html" target="_hplink">raised $151 million</a> in January 2011. <a href="http://blogs.wsj.com/venturecapital/2011/01/26/demand-medias-14b-ipo-post-value-ranks-highly/" target="_hplink"><em>The Wall Street Journal</em> reports</a> that the company was worth a whopping $1.78 billion after its first day on the New York Stock Exchange. As of December 16, 2011, <a href="http://www.dailyfinance.com/quote/nyse/demand-media-inc/dmd" target="_hplink">the company's market cap</a> had fallen to $593 million. In the photo above, Richard Rosenblatt, Chairman and CEO of Demand Media, joins Tyra Banks at the New York Stock Exchange on March 15, 2011.
Angie's List: $130 Million
Angie's List, a site where members can review doctors, contractors and more, raised $130 million in its November 2011 IPO, <a href="http://venturebeat.com/2011/11/17/angies-list-ipo-performance/" target="_hplink">according to VentureBeat</a>. The AP notes that at the end of the first day of trading, the company was valued at $904 million. As of December 16, 2011, <a href="http://www.dailyfinance.com/quote/nasdaq/angies-list-inc/angi" target="_hplink">the site had a market cap</a> of $886 million.
Zillow: $69 Million
<a href="http://techcrunch.com/2011/07/20/zillow-soars-200-percent-in-first-trade-with-over-1-billion-valuation/" target="_hplink">According to TechCrunch</a>, the real estate website Zillow raised about $69 million in its July 2011 IPO. The value of the company <a href="http://www.huffingtonpost.com/huff-wires/20110720/us-zillow-ipo/" target="_hplink">rose to as high as $1.6 billion</a> on the first day of trading but dropped to $950 million at market close. As of December 16, 2011, <a href="http://www.dailyfinance.com/quote/nasdaq/zillow-inc/z" target="_hplink">Zillow's market valuation</a> was $657 million.