Facebook Said to Plan Record-Size IPO at $100 Billion Valuation

Tuesday, 29 Nov 2011 07:01 AM

 

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Facebook Inc. is considering raising about $10 billion in an initial public offering that would value the world’s largest social-networking site at more than $100 billion, a person with knowledge of the matter said.

The company may file for the IPO before the end of the year, said the person, who asked not to be identified because the deliberations are private. Exact timing for the filing hasn’t been determined, the person said.

Facebook’s $100 billion valuation would be twice as high as it was in January, when the company announced a $1.5 billion investment from Goldman Sachs Group Inc. and other backers. Facebook aims to capitalize on strong demand for social- networking IPOs, said Josef Schuster, founder of Chicago-based IPOX Schuster LLC.

“It’s obviously a very steep valuation,” said Schuster, whose firm invests in IPOs and oversees about $2.5 billion in assets. “They are realizing their window of opportunity, and they want to do it sooner rather than later.”

At $10 billion, the offering would raise more money than any other technology IPO, a sign Facebook expects investors to clamor for a piece of the social-networking company. The amount would dwarf that of the previous record holder, Infineon Technologies AG, which generated $5.23 billion in its 1999 debut. Agere Systems Inc. raised $4.14 billion in 2000, putting it second.

Hard to Predict

Facebook’s IPO is far enough away that the details may change, said Lise Buyer, principal of the Class V Group, an IPO advisory firm.

“It’s far too early to accurately predict where the valuation will be on deal day,” she said.

Facebook expects to be required by U.S. regulators to disclose financial results by April 30, 2012, if it doesn’t go public by then, the company said in January. Facebook decided to wait until 2012 for its IPO to give Chief Executive Officer Mark Zuckerberg more time to gain users and boost sales, people familiar with the matter said last year.

Facebook, which boasts more than 800 million users, also is increasing its focus on mobile technology, aiming to take advantage of the shift to smartphones and tablets. The company expects its next 1 billion users to come mainly from mobile devices, rather than desktop computers.

Jonathan Thaw, a spokesman for Palo Alto, California-based Facebook, declined to comment on the IPO plans.

Google’s IPO

Google Inc., one of Facebook’s chief rivals in the Internet advertising market, raised $1.67 billion in its IPO in 2004. It is now valued at $190.4 billion.

Facebook’s valuation is currently pegged at $66.6 billion by SharesPost Inc., which handles trading of privately held companies. The Wall Street Journal reported earlier yesterday that Facebook was considering the $10 billion IPO with a valuation of more than $100 billion. The company aims to go public between April and June, the Journal said.

Demand for technology IPOs reignited in November after a summer lull, setting the stage for Groupon Inc. and Angie’s List Inc. to go public. Groupon, the largest provider of online coupons, has lost 24 percent of its value since its debut at $20 earlier this month.

Groupon’s decline may be spurring other companies to pursue IPOs before they lose the chance, Schuster said.

“Groupon has lost a lot of steam and I believe bankers are saying, ‘The market is still hot so let’s do it right now,’” he said.


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