INVESTMENT BANKERS are warming up for the race to land what promises to be one of next year’s most lucrative initial public offering (IPO) advisory jobs – Facebook.
The Wall Street Journalreported yesterday that bankers and venture capitalists had named long-time rivals Goldman Sachs and Morgan Stanley as frontrunners.
“Facebook’s stock sale could be as big as $10 billion [€7.72 billion], valuing the company at $100 billion or more,” the Wall Street Journal said in a technology blog.
“Fees for IPOs of that size have averaged 2.2 per cent, according to Dealogic, which tracks new issues. That would mean a possible total pay-off of as much as $220 million, though the company could negotiate lower fees because the Facebook deal is such a trophy.”
Data compiled by Bloomberg shows that the value of internet flotations could reach $11 billion next year, which would only be second to the $18.5 billion raised at the height of a tech bubble in 1999.
Fourteen such companies are considering flotations next year. While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe’s sovereign debt crisis could temper the pace of global IPOs after a 38 per cent decline in 2011.
Even internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online radio company Pandora slumped following share sales this year, according to research firm Morningstar.
“Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop,” said David Erickson of Barclays. “You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market.”
IPOs raised $155.8 billion in 2011, compared with $252 billion a year earlier, and US initial offerings generated $38.8 billion, about 10 per cent less than in 2010. In Asia, IPOs this year have raised $79.2 billion, less than half the $176.5 billion last year.
While funds raised in Europe rose for the year, they sank more than 95 per cent since August from a year earlier. – (Additional reporting: Bloomberg)
