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Facebook's IPO by Apr-Jun 2012

November 29, 2011 11:17 IST

FacebookFacebook is looking to go public between April and June next year, with the Mark Zuckerberg led social networking site's much-awaited initial public offer expected to peg the value of the company at $100 billion, a media report said on Tuesday.

Facebook, which has about 800 million users worldwide, is currently in 'internal discussions' with US regulator Securities and Exchange Commission regarding the timing of its initial public offering, the Wall Street Journal quoted people familiar with the matter as saying.

In what is touted as one of the largest public offerings ever, the company is exploring raising $10 billion in an IPO that could value Facebook at more than $100 billion.

The California-based company's chief financial officer David Ebersman has been leading the company's talks with Silicon Valley bankers about an IPO.

Ebersman has told some bankers that he is skeptical over what contribution investment banks could make to a Facebook IPO, since the company is so highly sought after by major investors, the report said.

It said Facebook is considering filing the IPO dates, which could be between April-June 2012, 'as early as this year.'

Zuckerberg is yet to make any final decisions regarding the IPO, and the date for a filing with the SEC is 'still in flux.'

Zuckerberg, who in the past was not open to the idea of an IPO and wanted to keep his company private, is now 'warming to the idea (of an IPO).'

"The final value of the company and how much money it seeks in an IPO will largely be determined by the market and the European economy," the WSJ report added.

Facebook has worked on its internal prospectus and is 'ready to go public at any time,' the report said quoting people in the know.

The company has not made any decisions regarding which banks would be involved in its IPO.

A Facebook IPO has been viewed as a 'defining moment' for the latest web investing boom.

Facebook is expected to make its debut on the market with revenues of more than four billion dollars, making it bigger than Yahoo, the report said.

The company has not been forthcoming about the details of the IPO with Facebook spokesman Larry Yu saying "We're not going to participate in speculation about an IPO."

The report said Facebook will be required to make its financial information public by April, because the company will cross the 500-shareholder limit by the end of this year.

The SEC requires companies with more than 500 shareholders to publicly disclose its financial information.

If Facebook publishes its financial information next year without an IPO, it would not be advantageous to the company since it would have 'most of the liability that comes with being a public company, but lose out on the fundraising benefits of a public offering.'

While talks of a Facebook IPO have been doing the rounds for some years now, Zuckerberg had earlier this month said going public 'is not something I spend a lot of time on a day-to-day basis thinking about.'

The Harvard dropout and billionaire CEO had said the key priority for his company is to get the 'best engineers and designers and talented people around the world.'

"We have made this implicit promise to our investors and to our employees that by compensating them with equity and by giving them equity, that at some point we are going to make that equity worth something publicly and liquidly, in a liquid way.

"Now, the promise isn't that we're going to do it on any kind of short-term time horizon."

Recent IPOs by major companies like Groupon and LinkedIn have so far not yielded the desired and satisfactory results.

Groupon plummeted 42 per cent in price in the past five trading days while LinkedIn has fallen 36 per cent from its first trading day in May.

The WSJ report said only 13 IPOs have so far been completed with a value greater than $10 billion, and just three of those have been for US -- Visa at $19.7 billion in 2008, General Motors at $18.1 billion in 2010 and AT&T at $10.6 billion in 2000.

A Facebook offering of $10 billion would be the largest IPO by any technology or Internet company.

The largest US Internet IPO, which was the $1.9 billion sale in 2004 by Google and which valued the Internet giant at $23 billion, ranks number 3 among global Internet IPOs.

Facebook's world-wide ad revenue is expected to hit $3.8 billion this year, up from $ 1.86 billion a year earlier, according to data compiled by eMarketer.

Yoshita Singh in New York
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