Facebook May Register For IPO As Early As Wednesday [UPDATED]

Facebook may submit paperwork Wednesday to register for an initial public offering that could be the largest of all time and turn the social network into one of the world's most valuable companies.

Facebook may submit paperwork as early as Wednesday to register for an initial public offering that could be the largest of all time and make the social network one of the world’s most valuable companies.

“We’re not going to participate in IPO-related speculation,” said Jonny Thaw, a spokesperson for Facebook, via an email to us.

No one has been able to obtain on-the-record confirmation by any of the parties directly involved in the 12-digit deal.

However, scores of third party analysts have been talking on the record as if an IPO filing next week were a certainty.

The rumor first appeared in The Wall Street Journal, which said that Morgan Stanley might lead the underwriting, and that Goldman Sachs might play a major role.

We’ve asked the two investment banks for comment, although they both have a long history of complying with laws prohibiting discussion of imminent initial public offerings with the media before they occur.

This latest rumor jibes with another one we’d reported earlier this week about a three-day halt in processing trades of Facebook’s private shares that began this Wednesday.

The law firm that handles these transactions, Fenwick & West LLC, never responded to our request for comment when the news broke Tuesday and has yet to do so today.

Contacts at both SharesPost and SecondMarket, where the stock trades privately, declined to comment that day and did so again today.

The Journal puts the IPO valuation in the range of $75 billion to $100 billion, the lower end of which was the outcome of the last SharesPost auction, which closed at $34 per share one week ago.

Assuming the number of outstanding shares remains at 2.35 billion, Facebook’s current value is $79.9 billion.

Media coverage of the deal has included the fact that the competition for the underwriting has been so fierce over the past year that Morgan Stanley and Goldman Sachs have been offering to bring down their fees to as low as one percent of gross proceeds, which compares with seven percent for the typical deal.

Reuters learned that from James Montgomery, chief executive officer of the eponymous financial advisory company Montgomery & Company.

He said that even with the unheard-of low percentage rate for a fee, that would still yield something on the order of $100 million in revenues for the underwriters and put the lead bookrunner at the top of the rankings for the year.

Another competition is still underway between the New York Stock Exchange and Nasdaq for the privilege of listing the stock, for which the ticker has yet to be determined but could be something like FBOOK.

Indeed, until recently, it seemed like Facebook was going to remain private and even raise additional capital by selling shares privately but the trading halt this week marked the first sign that perhaps the rumors of a public offer might have some merit.

The Securities and Exchange Commission had suggested last spring that Congress alter the law requiring companies with more than 500 shareholders to disclose financial performance. That change hasn’t occurred, and the law still in place would require Facebook to begin making quarterly financial disclosures three months from now. Filing to go public would involve the same disclosures and raise more money than any private share sale would.

Meanwhile, a forthcoming IPO by Facebook would only have shares available to employees of the company, the underwriters, existing investors, and sophisticated investors, as is the case with any public offer.

However, private shares of Facebook are already held by some funds at Fidelity and T. Rowe Price, so investing in either could get you a piece of Facebook.

Publish date: January 27, 2012 https://stage.adweek.com/digital/facebook-ipo-filing/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT