Social site wants to raise $13 billion from its friends

By Brian Womack, Douglas MacMillan

The initial public offering would value Facebook at $130 billion. Photo / APN
The initial public offering would value Facebook at $130 billion. Photo / APN

Facebook is considering raising about US$10 billion ($13 billion) in an initial public offering that would value the world's largest social-networking site at more than US$100 billion, a source has said.

The company might file for the IPO before the end of the year, said the person, who asked not to be identified because the deliberations are private. Exact timing for the filing had not been determined, the person said.

Facebook's US$100 billion ($130 billion) valuation would be twice as high as it was in January, when the company announced a US$1.5 billion investment from Goldman Sachs Group and other backers.

The company aimed to capitalise on growing demand for social-networking IPOs, said Josef Schuster, founder of IPOX Schuster.

"It's obviously a very steep valuation," said Schuster, whose firm invests in IPOs and oversees about US$2.5 billion in assets.

"They are realising their window of opportunity, and they want to do it sooner rather than later."

At US$10 billion, the offering would raise more money than any other technology IPO, a sign Facebook expects investors to clamour for a piece of the social-networking company.

The amount would dwarf that of the previous record holder, Infineon Technologies, which generated US$5.23 billion in its 1999 debut.

Lise Buyer, principal of the Class V Group, an IPO advisory firm, said Facebook's IPO was far enough away that details might change.

"It's far too early to accurately predict where the valuation will be on deal day," she said.

Facebook said in January that it expected to be required by United States regulators to disclose financial results by April 30, 2012, if it did not go public by then.

The company decided to wait until 2012 for its IPO to give chief executive Mark Zuckerberg more time to gain users and boost sales, people familiar with the matter said last year.

Facebook, which boasts more than 800 million users, is also increasing its focus on mobile technology, aiming to take advantage of the shift to smartphones and tablets. The company expects its next one billion users to come mainly from mobile devices, rather than desktop computers.

Google, one of Facebook's chief rivals in the internet advertising market, raised US$1.67 billion in its IPO in 2004. It is now valued at US$190.4 billion.

Facebook's valuation is currently pegged at US$66.6 billion by SharesPost, which handles trading of privately held companies.

Demand for technology IPOs reignited in November after a lull, setting the stage for Groupon and Angie's List to go public.

Groupon, the largest provider of online coupons, has lost 24 per cent of its value since its debut at US$20 this month.

Groupon's decline might be spurring other companies to pursue IPOs before they lost the chance again, Schuster said.

"Groupon has lost a lot of steam and I believe bankers are saying, 'The market is still hot so let's do it right now."'

- Bloomberg

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