Facebook eyes up to US$12B in mega IPO

SAN FRANCISCO — Facebook plans to raise as much as US$12 billion in Silicon Valley’s largest IPO, dwarfing the coming-out parties of tech companies like Google and granting the world’s largest social network a market value close to Amazon.com’s.

The eight-year-old social network that began as Mark Zuckerberg’s Harvard dorm room project priced its initial public offering yesterday at between US$28 and US$35 a share, attaining a valuation of as much as US$95.9 billion at the high end.

If an over-allotment or “greenshoe” option is triggered, the company could end up raising close to US$13.6 billion, according one prospectus yesterday.

Investors are expected to flock to the highly anticipated IPO, though some have voiced concerns about the social network’s longer-term growth.

Last week, Facebook reported its first quarter-to-quarter revenue slide in at least two years, a sign that the social network’s sizzling growth may be cooling just as it prepares to go public. Its stock should begin trading in about a week or two.

Facebook, which plans to list its stock on the Nasdaq under the ticker “FB,” will begin meeting with investors on Monday.

Facebook’s capital-raising target far outstrips big Internet IPOs that came before it. Google raised just shy of US$2 billion in 2004, while last year Groupon tapped investors for US$700 million and Zynga raked in US$1 billion.

At close to US$100 billion, Facebook’s capitalization will rival Amazon.com’s and Cisco Systems’ market values of just over US$100 billion, while surpassing those of older technology companies such as Hewlett-Packard and Dell put together.

CEO Mark Zuckerberg, 28, will keep tight control over the company even after the IPO. He will control about 58 percent of the company’s voting power, through stocks he owns or because other shareholders have promised to vote his way through shares that they own. Zuckerberg will own 31.5 percent of Facebook’s outstanding stock after the IPO. At the high end of the expected price range, this will make his holdings worth US$17.6 billion. This would put him at around No. 33 of the Forbes lists of the world’s richest people, above the likes of Michael Dell and Steve Ballmer.

In its prospectus, Facebook said the "lock-up" period, during which employees cannot sell shares after the IPO, would range from 151 days to 181 days.

Some investors think Facebook, which touts 845 million users worldwide, is setting itself a fairly conservative target.

"The price range may be tactical. They will likely walk the range up," argued Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly US$200 million.