Facebook Said to Raise Size of IPO to 421 Million Shares
Facebook Inc. (FB) investors such as Accel Partners and Goldman Sachs Group Inc. (GS) increased the number of shares they’re selling in the social network’s initial public offering, boosting the sale to as much as $16 billion.
Existing holders will offer 241.2 million shares, bringing the total on offer to 421.2 million, a regulatory filing today shows. Accel, the biggest seller in the IPO, raised the amount it’s selling by 28 percent, while Goldman Sachs more than doubled its shares on offer.
Facebook, girding for the largest-ever IPO of a technology company, yesterday boosted the offering’s price range to as much as $38 a share, indicating a market value as high as $104 billion. While the expanded IPO may mean the appetite for shares is strong, insiders’ decision to pare holdings further may heighten some investors’ concern over Facebook’s earnings growth, said Greenwood Capital’s Walter Todd.
“If the demand wasn’t there, they wouldn’t have upsized the deal,” said Todd, who oversees about $940 million as chief investment officer at the Greenwood, South Carolina-based firm. “On the other hand, when you see insiders unloading their stakes, you start to wonder why. I could see it turning some institutional investors off.”
Accel, based in Palo Alto, California, is now offering 49 million shares, while Goldman Sachs plans to sell 28.7 million. Digital Sky Technologies increased its amount 74 percent to 45.7 million, while Tiger Global Management is selling 23.4 million shares, almost 7 times the amount first offered.
Faster Sales Possible
Facebook’s executives and directors increased the amount of shares they’re selling 62 percent to 189.4 million. Co-founder Mark Zuckerberg, the top shareholder, didn’t boost the amount of shares he’s selling.
Accel will hold about 23 percent of Facebook’s Class A shares following the offering, compared with about 5.9 percent for Goldman Sachs, according to today’s filing. Digital Sky will own about 5.4 percent of the Class B shares after the sale, and Tiger Global will hold about 2 percent.
“Everybody is cashing out,” said Trung-Tin Nguyen, a hedge-fund manager at TTN AG in Zurich. “It’s normal for private equities and venture capitals to cash out, but the obvious question is whether they are stretching it too far.”
Facebook amended the lock-up agreement with Digital Sky and Mail.ru Group Ltd. to allow those investors to sell more of their stock sooner after the IPO. They’re allowed to sell 75.1 million shares 91 days after the IPO and the remainder 366 days after, today’s filing shows.
Milner’s Ownership
Facebook had previously disclosed that the firms could sell 43.2 million shares after the 91-day period. Russian billionaire Yuri Milner, founder of Digital Sky, holds stakes in Mail.ru and Facebook through that investment firm.
Investors are betting that Chief Executive Officer Zuckerberg can overcome slowing sales growth by expanding into areas such as mobile advertising and e-commerce, said Samuel Schwerin, managing partner at New York-based Millennium Technology Value Partners.
“An increasing number of institutional investors are looking beyond the value of the business today and looking at the future growth,” Schwerin, whose firm oversees $1 billion, including Facebook stock, said yesterday. “Those drivers are extraordinary in size, including international and mobile and commerce.”
Debut Comparisons
Menlo Park, California-based Facebook and its existing holders had earlier planned to offer 337.4 million shares. Before the company raised the price range to $34 to $38 a share, it had offered the stock at $28 to $35. Its underwriters will have the option to buy an additional 63.2 million shares from the company and its holders after the IPO, the company said in the filing today.
Facebook executives including Zuckerberg and Chief Operating Officer Sheryl Sandberg will mark the May 18 trading debut with a symbolic bell-ringing at the company’s headquarters, people with knowledge of the matter said. They will be joined by Nasdaq OMX Group Inc. (NDAQ) Chief Executive Officer Robert Greifeld, said the people, who asked not to be identified because the event isn’t open to the public.
At $16 billion, Facebook’s debut would surpass that of General Motors Co. to be the second-largest in U.S. history, excluding so-called over-allotments, which let underwriters buy more shares at a later date, data compiled by Bloomberg show.
GM Stops Advertising
GM raised $15.8 billion in November 2010, before expanding the sale to $18.1 billion when underwriters exercised the over- allotment option. Visa Inc. raised $17.9 billion in its 2008 IPO, the biggest in the U.S., and later expanded the sale to $19.7 billion.
Separately, GM, the world’s biggest automaker by vehicles sold, said yesterday that it no longer plans to advertise on Facebook. The social network said last week that growth in advertising sales isn’t keeping pace with gains in users.
The new shares indicate that Facebook is offering about 15 percent of its stock in the IPO, according to the filing. Facebook’s shares are set to price tomorrow and begin trading under the symbol FB on the Nasdaq Stock Market the following day.
Zuckerberg celebrated his 28th birthday this week, during the final leg of a marketing tour aimed at building demand for the IPO and convincing investors that Facebook can make money from mobile users.
Some institutional investors had balked at buying into Facebook early in the road show over concern about the site’s growth prospects, people with knowledge of the matter said last week. In a Bloomberg Global Poll of more than 1,250 investors, analysts and traders taken before the price range increase, 79 percent said Facebook didn’t deserve such a high valuation.
To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Douglas Macmillan in New York at dmacmillan3@bloomberg.net; Zijing Wu in London at zwu17@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
Goldman Plans to Cash Out $1 Billion of Facebook Holdings
Robyn Beck/AFP/Getty Images
A mural decorates a work area at Facebook's headquarters in Menlo Park, California.
A mural decorates a work area at Facebook's headquarters in Menlo Park, California. Photographer: Robyn Beck/AFP/Getty Images
May 15 (Bloomberg) -- Ashok Kumar, senior technology analyst at Maxim Group LLC, talks about Facebook Inc.'s decision to boost the price range on its initial public offering to seek as much as $12.8 billion and the outlook for investor reaction to the IPO. The new price range is $34 to $38 a share, a regulatory filing today shows, indicating a market value of as much as $104.2 billion. Kumar speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
May 16 (Bloomberg) -- Bloomberg Television's Emily Chang reports on the importance of Facebook Inc. Chief Operating Officer Sheryl Sandberg to the company ahead of its initial public offering. (Source: Bloomberg)
May 17 (Bloomberg) -- Michael Clendenin, managing director at research company RedTech Advisors in Shanghai, talks about the potential challenges Facebook Inc. would face if the social-networking company considers entry into China. Clendenin speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
May 15 (Bloomberg) -- Jason Lilly, director of portfolio management at Rockland Trust Co., talks about Facebook Inc.'s pending initial public offering. Facebook boosted the price range on its initial public offering to seek as much as $12.8 billion. Lilly speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
May 16 (Bloomberg) -- Lydia Daly, strategy planning director at JWT Singapore, talks about Facebook Inc. as an advertising medium and the outlook for the company. Daly speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
May 17 (Bloomberg) -- Duncan Clark, chairman of Beijing-based BDA China, which advises technology companies, talks about Facebook Inc.'s initial public offering, business outlook, and the potential challenges the social-networking company would face if it seeks entry into China. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
May 16 (Bloomberg) -- Tom Skotidas, founder and director of Skotidas Pty Ltd., talks about General Motors Co.'s plan to stop advertising on Facebook Inc. and businesses' use of social-networking websites for marketing purposes. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
May 16 (Bloomberg) - Bloomberg's Josh Lipton reports on whether or not to buy Facebook shares on the first day of trading. He speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)
May 16 (Bloomberg) -- Ian Sigalow, a partner at Greycroft Partners LLC, talks about the outlook for Facebook Inc. and strategies for generating advertising revenue from mobile device users. He speaks with Adam Johnson and Stephanie Ruhle on Bloomberg Television's "InBusiness." (Source: Bloomberg)
May 16 (Bloomberg) -- David Jones, chief executive officer of Havas SA, talks about General Motors Co.'s announcement it will stop paid advertising on Facebook Inc. and the outlook for the social-network company's initial public offering. Jones speaks with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)
Facebook Said to Increase Size of IPO to 421 Million Shares
Jason Alden/Bloomberg
Facebook, gearing up for the largest-ever IPO for a technology company, had already increased the IPO share-price range to $34 to $38 apiece.
Facebook, gearing up for the largest-ever IPO for a technology company, had already increased the IPO share-price range to $34 to $38 apiece. Photographer: Jason Alden/Bloomberg
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