Founded by Mark Zuckerberg in 2004 in his Harvard dorm room, the Giant in the Social networking space, Facebook will be opening doors to the much awaited IPO [initial public offering] on Wednesday.
A news report that was published by International Financing Review, one of Thomson Reuter’s publications said the company is looking at raising nearly $5 billion.
The publication went on to share that Facebook has identified Morgan Stanley as the company to manage their deal, act as the “lead left” bank for them in what is likely to be the largest IPO to ever happen in the Silicon Valley. Some of the other companies that are part of the deal are Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and Barclays Capital. Morgan Stanley’s past experience in planning and executing some of the major Internet IPOs such as Groupon and Zynga are what helped Facebook take this decision which was kept under wraps till the final decision was made.
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.
Facebook will now file their IPO prospectus with the Securities & Exchange Commission, who will then analyze the documents along with financial statements. Prospective investors will also get the opportunity to look at Facebook’s papers for the 1st time.
Amidst rumours of whether Facebook was serious in coming out with IPO, the news that they stopped trading in all secondary markets for about 3days last week which proves they are indeed going with the decision.
If and when Facebook does file its S-1 paperwork, it will be forced to enter a “quiet period” — without product announcements, interviews or any other public statements.
The IPO would infact raise far lesser for Facebook than what they expected, which was around $10 billion. IFR did quote that Facebook can always increase the expected number based on investor response and demand. This is not a bad start considering many other IPOs that were recently launched dint take off too well. Infact, companies such as Groupon and Pandora, the web radio service provider faced a challenge when their stock prices fell drastically as they went Public.
May is when one will know what the actually offering from Facebook will be, and this is after they have completed their IPO process and are open to public for investments.
Right up to the day before going public, Facebook was trading at $83.5 billion valuation as stated on Sharespost.