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Facebook has increased the number of shares it expects to sell in its initial public offering this week, a day after it raised the targeted price range, highlighting huge demand and ranking it near the largest flotations.
The world’s largest social network by users said it would aim to sell 25 per cent more stock than originally planned, to 421m shares. At the new maximum price of $38, that could raise the company $16bn.
Mark Zuckerberg, the company’s founder, plans personally to sell 126m shares, the most of any existing shareholder. This could raise him $4.8bn at the maximum price level.
Even as price and supply rises, demand for the hugely anticipated IPO is still strong ahead of the pricing of the deal on Thursday night, according to market participants. Facebook and its underwriters, led by Morgan Stanley, stopped accepting new orders for stock on Tuesday.
Scott Sweet, senior managing partner at IPO Boutique, an investor advisory, told clients on Wednesday: “Despite both a price increase and share increase, [Facebook] is still massively oversubscribed.”
If demand were strong enough, the IPO could price as high as $45 a share – or 20 per cent above its maximum offering range – without Facebook having to file fresh documents with regulators and delaying the deal, according to US securities rules.
At this size and price, Facebook’s float would further cement its place as the largest ever global technology company offering, surpassing Google’s 2004 $1.7bn offering, and Infineon’s $5.9bn sale in 2000, according to figures from Thomson Reuters.
The initial sale will float about 20 per cent of Facebook’s shares, more closely in line with the 10-year average stake sale for US tech companies of 25 per cent, according to Dealogic. Other recent deals, such as the IPOs of Yelp, Groupon and Zynga, sold closer to 10-15 per cent.
Facebook’s underwriters and selling shareholders can also sell an additional 63m shares immediately after the deal prices. If those are sold at $38, the deal could raise $18.4bn – nearing the US and $20bn-plus global records set by General Motors and China’s AgBank.
Other sellers in the offering include venture capital firms Accel Partners and DST, and funds controlled by Goldman Sachs. Facebook itself is now selling 180m shares, raising $6.8bn for investment in its business.
Facebook’s offering alone would see the internet software sector surpass the height of the dotcom boom for money raised in a year. In 2000, $15bn was floated.
However, Facebook’s coat-tails have still not driven a broader global rebound in new equity issuance, with investors still skittish about companies more closely tied to economic growth.
Even with Facebook’s sale, global proceeds from IPOs would be $47bn via 285 issues so far this year. At this time last year, proceeds were $74bn from 367 deals, according to Thomson Reuters.