March 7 (Bloomberg) -- In a boon to investment banks looking for good news amid tanking markets, a score of Internet companies went public in 2011. Professional-networking site LinkedIn Corp. hit the market in May, offering shares that as of March had nearly doubled in value. Discount coupon seller Groupon Inc. followed in November, and then game developer Zynga Inc. joined the parade in December.
Those listings were only a warm-up for 2012.
The initial public offering investors have been waiting for -- Facebook Inc. -- was finally announced by Chief Executive Officer Mark Zuckerberg in February. Analysts expect Facebook, which has 845 million users worldwide, to sell $10 billion in shares, valuing the company at as much as $100 billion. Zuckerberg, 27, will retain almost 60 percent of the voting power, and the IPO could make his holdings worth as much as $28 billion, Bloomberg Markets magazine reports in its April issue.
Facebook chose Morgan Stanley as the lead underwriter on its listing -- a good start for that firm in 2012 after it scored first place for 2011 equity offerings in Bloomberg Markets’ annual ranking of the best-paid investment banks. The ranking is based on the fees banks earned from IPOs and secondary stock sales. It doesn’t include equity-linked deals.
In topping the ranking, Morgan Stanley pushed aside JPMorgan, which was No. 1 for 2010 and fell to No. 4 last year, according to data compiled by Bloomberg.
‘A Huge Thing’
The Facebook listing “is a huge thing for Morgan Stanley,” says Reena Aggarwal, a professor at Georgetown University’s McDonough School of Business. Aggarwal adds that it may not be hugely profitable. Zuckerberg could pay his bankers as little as 1 percent of the value of the deal, people familiar with the matter say, compared with a 5.5 percent average for U.S. IPOs in 2011.
Equity sales started strong in 2011, riding the previous year’s momentum. “Markets were ebullient,’’ says Raj Dhanda, head of global capital markets at Morgan Stanley.
The last quarter of 2010 was the busiest-ever for share sales, as governments from the U.S. to Asia sold businesses to the public for cash. That momentum carried into 2011 before Japan’s earthquake and tsunami and unrest in the Middle East put the brakes on transactions.
Deal flow dried up by late summer, as rising concern over Europe’s debt woes spurred market concern and investors’ appetite for risk vanished.
“We saw the market really get tentative,” says Mary Ann Deignan, head of Americas equity capital markets at Bank of America Corp.
Eight of the 10 biggest equity sales happened before August.
“2011 looked good at first,” says Paul Deninger, a senior managing director at New York-based investment banking advisory firm Evercore Partners Inc. “Then the bottom fell out of the market, and it all links to Europe. The second half of the year was really tough.’’
The Groupon and Zynga IPOs late in the year brought some investors back. More cash was raised in Internet IPOs worldwide last year -- $7.2 billion -- than in any year since the dot-com boom of the late 1990s. The biggest deal was Yandex NV, operator of Russia’s biggest search engine, which listed in the U.S. and raised $1.4 billion in May.
Morgan Stanley led IPOs by Yandex, LinkedIn, Groupon and Zynga. It also helped manage 2011’s biggest IPO, commodity trader Glencore International Plc, which raised $10.1 billion in a dual listing in London and Hong Kong.
News from Greece
Stock sales “declined pretty dramatically” after the first six months, says Mohit Assomull, global head of equity syndicate at Morgan Stanley, and didn’t begin to recover until year-end, when the news from Europe indicated Greece might avoid default.
“As we saw the VIX come down and the S&P stabilize, we felt we could get some deals done again,’’ Assomull says.
After 2011, Morgan Stanley’s Dhanda is not willing to predict a breakout year.
“We’re planning for a muted environment,’’ he said in late January. Still, Dhanda says, 2012 is no easier to predict than was 2011. A boost from Facebook may be in store.
To contact the reporter on this story: Lee Spears in New York at