[Infowarrior] - The Facebook IPO

[Richard Forno]

(And no, I'm not touching this thing.  IMHO it's grossly over-valued, surrounded by a huge bubble-mania, and I suspect the only folks left holding the bag in a year will be the retailers and small funds who are suckered into thinking this is the next GOOG or AAPL.  BTW, I think their revenues peaked 3 or 4 quarters ago if I remember their SEC filings correctly.   -- rick)

Last updated: May 16, 2012 8:47 pm

Early Facebook backers add to share sale

By Telis Demos in New York

http://www.ft.com/intl/cms/s/0/80f2e7a0-9f59-11e1-a255-00144feabdc0.html#

Some of Facebook’s earliest backers plan to sell an additional $3bn worth of shares in Thursday’s initial  public offering, as they take advantage of a wave of public interest in the social network group’s flotation.

The move will increase the number of shares on offer by 25 per cent, with proceeds flowing to existing investors such as Goldman Sachs, Tiger Global Management and Accel Partners.

Investor demand has been stoked by a cross-country US roadshow over the past two weeks, allowing Facebook to increase the size of its offering from $12bn to as much as $18bn.

However, the company continues to rankle some large institutional investors who fear that the IPO’s rising price and heavy insider selling could make Facebook shares more volatile after their market debut. The company lifted its price range to $34 to $38 this week, from the $28 to $35 initially indicated.

“We’re seeing a whole new level of insider selling. It went from something you can explain away [to potential investors] to something that’s harder to,” said Sam Hamadeh, a former banker and chief executive of PrivCo, a boutique research firm.

Typical IPOs see limited selling by management and early investors, as incoming shareholders expect the interests of key board members to remain aligned with their own.

The market for Facebook’s shares is “massively oversubscribed” with especially strong demand by individual investors, according to a survey of investors by IPO Boutique, an advisory firm.

The deal now could raise as much as $18bn if, as expected, an overallotment is exercised, making it the second-largest US IPO ever.

The largest extra sales are by Tiger Global Management, a hedge fund that plans to sell 23m shares, up from more than 3m previously.

Goldman Sachs, which attracted attention for scuttling plans to market pre-IPO Facebook shares to US investors, has more than doubled the number it plans to sell, raising up to $1bn. The bank itself is selling shares as are its investment management units.

While the number of shares being sold directly by Facebook remains at 180m, worth $6.8bn at the top of the price range, board members are also selling more. Peter Thiel and James Breyer, who represents venture capital firm Accel Partners, are both increasing their sales.

Mark Zuckerberg, the company’s founder, is not selling additional shares, though the sales of shares by board members who have pledged control of their voting shares to him will reduce his voting stake to 55.5 per cent from 57 per cent, according to figures from PrivCo.

The sale will leave about 20 per cent of Facebook’s shares in public hands, more closely in line with the 10-year average for US tech companies of 25 per cent, according to Dealogic. Other recent deals, such as the IPOs of Yelp, Groupon and Zynga, sold closer to 10-15 per cent.

Facebook’s shares, to be listed with the symbol “FB” on Nasdaq, are due to begin trading on Friday.

The size of Facebook’s offer could rise further when underwriters set the final price. Under US securities rules, the IPO could price as high as $45 – or 20 per cent above its offering range – without Facebook having to file fresh documents with regulators.

Facebook’s offering alone may see the internet software sector surpass the height of the dotcom boom for money raised in a year. However, Facebook’s coat-tails have not driven a broader global rebound in new equity issuance, with investors still skittish about companies more closely tied to economic growth.

Even with Facebook’s sale, global proceeds from IPOs would be $47bn via 285 issues so far this year. At this time last year, proceeds were $74bn from 367 deals, according to Thomson Reuters.

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Just because i'm near the punchbowl doesn't mean I'm also drinking from it.