Facebook's IPO will be for just $5B

David Heath
Wednesday, 01 February 2012 23:42

IT Industry - Listed Tech

Despite endlessly consistent rumours that Facebook will commence an IPO process to raise $10B, it seems that a late decision has been made to reduce the amount to $5B.

 

 

For the past few days, we have been reporting on expectations that Facebook will launch it's IPO today to raise $10B in the expectation of valuing the company at $80 - $100B.

 

In the past few hours, International Financing Review has claimed that a more conservative position has been adopted and that the IPO will be for just $5B.  It seems the intention is to start what is an effective a trickle-feed of shares onto the market in the hope that the scarcity will help buoy the price as more shares are released.

There is nothing in this report to suggest that previously reported timings have changed.  The IPO will be announced on February 1st (US time) with trading to commence in the week of May 20th.

It also appears that the underwriting syndicate has been extended from the original two organisations (Morgan Stanley and Goldman Sachs) to include Bank of America Merrill Lynch, Barclays Capital and JP Morgan.

Speculation continues that both original organisations are being punished by losing a significant portion of the business.  Goldman Sachs for triggering the IPO by selling shares to too many people in the latter part of 2010 and Morgan Stanley for being the source of the rumours that identified February 1st and May 20th as the key dates.

Final pricing of the IPO shares will not happen until the last few days of the process when all bids are in from prospective buyers.  Only then will we know the market's estimate of the real value of Facebook.