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Facebook set for a $10 bn IPO on Feb 1st

Social networking giant Facebook, which infamously spurned the Hub for Silicon Valley in 2004, will reportedly file its long-awaited, $10 billion initial public offering next week - the world's largest tech IPO ever.

india Updated: Jan 28, 2012 11:59 IST

Social networking giant Facebook, which infamously spurned the Hub for Silicon Valley in 2004, will reportedly file its long-awaited, $10 billion initial public offering next week - the world's largest tech IPO ever.

The Wall Street Journal reported yesterday the company, which CEO Mark Zuckerburg started in his Harvard dorm room, will file for an IPO valuing the company at $75 billion to $100 billion.

Google's 2004 IPO raised $1.9 billion and valued the search giant at $23 billion, the biggest U.S. Internet IPO until Facebook.

"Ten billion raised is a staggering amount of capital," said Michael Greeley of Flybridge Capital Partners. "It'll be a complicated offering, but it will be oversubscribed."

After the filing comes the "road show," where companies convince investors to buy shares, though this may not be a hard sell. Greeley said it will be a "food fight."

He predicted large venues, with Zuckerburg giving 10 meetings a day for 10 days.

"Everybody's going to be calling in favors, reminding people about the time they bought into deals that weren't successful, so you owe me one," Greeley said.

"There'll be a lot of jockeying going on."

David Smith, chief investment officer at Rockland Trust Investment Management Group, said despite the scale, Facebook may not be so different than the summer's

Internet IPOs such as LinkedIn or Groupon, which popped but then tanked on the market. Like those companies, Facebook will sell a small number of shares.
"For investors who get in on the offering, they'll do fine," Smith said. "But once again, I'd be very leery about being the first or second guy to buy it on the open market. If you buy it first you could get killed."

Still, he said he'll probably participate in the Facebook road show, but probably not request a position in it.

"We look at everything," he said. "It never makes sense not to look."

Image Credit: tsevis