Facebook to File for $5 Billion IPO on Wednesday

Facebook will file a preliminary prospectus for its long-awaited IPO Wednesday morning, but the company will raise less than expected — $5 billion.

Facebook is expected to file initial paperwork with regulators on Wednesday morning for a $5 billion initial public offering, sources close to the deal told IFR. Photo: Spencer Holtaway/Flickr

Facebook is expected to submit paperwork to regulators on Wednesday morning for a $5 billion initial public offering and has selected Morgan Stanley and four other bookrunners to handle the mega-IPO, sources close to the deal told IFR.

International Financing Review cites “sources close to the deal” who say the company is planning to raise half of the previously reported $10 billion because it decided to “start with a conservative base before deciding whether to increase, according to Mashable.

The company founded by Mark Zuckerberg in a Harvard dorm room in 2004 picked Morgan Stanley to take the coveted “lead left” role in what is expected to be the largest IPO ever to emerge from Silicon Valley.

Morgan Stanley will lead the effort, though Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan are also included on the list of intial bookrunners.

Morgan Stanley’s experience in arranging major Internet IPOs – including those of Groupon and Zynga – helped it clinch a pivotal role after an unusually secretive selection process, IFR reported.

The company will offer shares to the public in May, pending a “smooth registration process with the SEC,” according to the report.

The preliminary IPO filing sets the stage for a May market of the world’s largest social network, IFR reported, a coming-out party that will dwarf almost any before that, including Google Inc’s $2 billion IPO, reports Reuters.

An upcoming share offering would also explain Facebook’s product roll outs of late. Last week the company announced it would be rolling out its new profile template, Timeline, to all users, at a speed that left us scratching our heads.

The week before it revealed 60 apps that are tightly integrated into Timeline, and announced a process for developers to create more Timeline apps.

The IPO – a prized trophy for any investment bank – likely set a new standard for how low its arrangers are willing to go on advisory fees to win big business, analysts say.

The prospective IPO has whipped up a frenzy of investor and media speculation this month, buoying shares in social media peers from RenRen to LinkedIn and igniting fierce competition on Wall Street.

According to Reuters, investors last year had warned of a second dotcom bubble inflating, after LinkedIn doubled on its debut; but the so-called over-enthusiasm has waned in recent months.

The last dotcom player to debut, Zynga, closed 5 percent below its IPO price during its first trading day in December.

Facebook declined to comment on the report by IFR.

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