Remember Facebook? Last night it filed an amended S-1 for its IPO including a bunch of contracts. Those contracts were so boring and bog-standard that … well, this:
SharesPost Financial Corporation completed its auction of 150,000 shares of the Class B Common Stock of Facebook, Inc. on February 8, 2012. A clearing price of $44.00 per share was established at the auction.
Using the 2.33bn shares implied by the “pro forma diluted share count” in its prospectus, that gets you about a $103bn pre-money valuation, or up about $10bn from this time last week. Assuming a constant price/Likes multiple, which is I assume how social networks are valued, that must mean that Facebook is approaching 3 billion “likes” per day.
The fact that you can get, um, weekly market prints for Facebook means that it is in a weird place for a private company, with a certain amount of liquidity and price transparency provided by private marketplaces. Investors who want to get out can, and accredited investors who want to get in also more or less can. So some think that FB is in essence already public, with most of the trappings of public trading for everyone but non-accredited retail shlubs. This is a good example of why that’s not necessarily so. Continue reading »
I started out not really caring about the Facebook IPO except as part of a vague stunt-driven desire to get some shares so I could tell you all that I’d gotten some shares. I now think that that plan was foolish, though I look forward to telling you how I was fleeced by retail brokers who pretended that they’d get me some shares. But as someone with a pretty meh reaction to good corporate governance, I’ve developed a certain fondness over the past, um, six days, for Facebook’s terrible corporate governance, which is laid out in a section of the IPO prospectus – right after the Hacker Way – titled “I’m CEO, bitch,”* and which involves Mark Zuckerberg controlling all decisions for the rest of his natural life and any cryogenic extension thereof.
CalSTRS, however, isn’t so sure:
“We are in fact in the beginning stages of engagement with Facebook” over governance issues, Ricardo Duran, a spokesman for the pension fund, said in an interview. “We are planning to send them a letter.”
Well that’s just super. Continue reading »
Not sure if the word has gotten out yet, but yesterday afternoon social networking site Facebook filed to go public. Almost as exciting as the news itself (for those who reach self-induced stroke levels of excitement over such things) was the answer to the burning question vis-à-vis which bank would win the coveted and lucrative role of lead bookrunner on the deal. As had been predicted, Morgan Stanley got the job. This happened, we’ve been told, because Morgan Stanley’s “dominant” tech team “has been largely unchanged since the mid-1990′s,” is based in Menlo Park rather than New York, has “seen every tech cycle,” and goes the extra mile to show that beneath their investment banker exteriors beat the hearts of a bunch of guys who really care. When it came to Pandora, which was said to be “wary” of the group, “Michael Grimes, co-head of global tech banking at Morgan Stanley, and his team wore concert T-shirts of their favorite bands from their Pandora profiles, including the Rolling Stones and Black Sabbath, under blue blazers when making their pitch.” In landing the Groupon deal, Grimes and his underlings presumably made sure to note the steal they got on laser hair removal using the site. And, of course, when making the hard sell for LinkedIn and Facebook, the bankers “set up accounts…in a show of support for their prospective clients.” AND YET! It appears only one networking site was granted the ultimate endorsement of Morgan Stanley. Continue reading »
Okay so you’re a private equity fund and you’ve filed to go public. GOTCHA:
Q. You tout the managerial-discipline, incentive-alignment and cost-saving benefits of taking companies out of the public equity markets. Yet you’re going public with your own company. Aren’t you just obviously destroying value to top-tick the market???
A. No, no, it’s not like that, see …
Q. TOP. TICK. THE. MARKET.
A. You got me. Never mind.
If this line of thinking resonates with you – and, like, I guess, right? – then you should get a certain amount of joy out of this:
Carlyle Group LP, the Washington- based buyout company that’s preparing to go public, is seeking to bar its future shareholders from filing individual and class- action lawsuits.
The firm revised its governing documents last week to say that investors who purchase company shares must settle any subsequent claims against Carlyle through arbitration in Wilmington, Delaware. That could limit the ability of stockholders to win big awards for securities-law violations such as fraud, several attorneys said.
Bloomberg, and Steven Davidoff at DealBook, have some fun with the question: can they do that? (Answer: maybe not!) Also with the question: isn’t that kind of mean? Davidoff writes:
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Two things that I have thought before and occasionally committed to these pages are:
(1) conflicts of interest at investment banks are actually sort of interesting and potentially value creative and not to be dismissed with knee-jerk “ooh conflicts evil,” and
(2) it just cannot be that hard to execute basic common stock capital markets transactions (but they pay well).
Now point (2) has always struck me as a bit shaky because of point (1). The absolute classic nexus for banking conflicts of interest is the big capital markets transaction, by which I mean mainly the big IPO, because this is the place where two sets of important clients square off against each other in a more or less zero-sum way. You can find win/win solutions on lockups or share structures or whatever, but ultimately you have investor clients who want to pay $X per share and an issuer client who wants to get paid $Y per share and Y>X and your job is more or less to make Y=X. Your business is making that trade happen with valuation models and technical arguments and wheedling and persuasion and steak dinners and threats and implicit promises of better deals in the future and whatever other tools you have available to you. This is complicated. Some of those tools are not tools you’re supposed to have.
A good capital markets bank makes the best possible use of the tools that it legally can use to get lots of deals done that everyone feels good about. It’s not rocket science necessarily, and it sometimes ends up being pretty easy, but at least sometimes it requires quite a bit of finesse and skill.
A deal that not that many people feel good about is the IPO of Zynga, led by Morgan Stanley and Goldman Sachs, which fell below its IPO price on day one and hasn’t looked back. So, sad for Zynga, or at least for its buyers. Even sadder: Continue reading »
The barriers to entry into underwriting sexy tech IPOs really shouldn’t be that high. Like, it’s not that hard. And, while much ink is spilled about how IPO underwriters are gatekeepers with a sacred trust to protect the public markets from dodgy companies, no firm has any official status that would give them an advantage in that gatekeeping function (as opposed to). But the top of the league table is pretty much who you’d expect if you weren’t expecting much:
From a public perspective this is maybe a good thing. Despite the lack of any official recognition, there’s something to be said for having IPOs – notionally the riskiest of public securities offerings, though, y’know – be underwritten by big-name long-established firms whose capital and reputation are theoretically on the line if the thing they’re underwriting turns out to be a turd.
From a client perspective it’s also understandable. At this point I could probably place the Groupon IPO from my couch, despite some questions about its valuation, because it’s a household name in a sexy sector and investors are desperate for anything without a 1.0 correlation to Greek bonds. But there will once again come a time when the market cracks and a mortgage REIT heavily exposed to Florida development deals and Chinese forests has to drag its IPO kicking and screaming over the finish line. When that happens, the client will be very happy to be doing a deal with a league table leader who can call up its best clients and say “I know you don’t normally buy IPOs in this particular sector, but remember that time I got you a big allocation on Groupon? Whaddaya say?” If you’re Groupon it now appears that you don’t need that kind of support, but you have to be pretty confident not to worry about that going into a six-month IPO process.
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We anticipate three reactions from people on the road: 1) “This is a great, I gotta get in.” 2) “This is good but, three year-old company…I’m not ready to take that risk.” 3) “I don’t get it. You guys are whacky.” We hope it’s more of the first two. –Jason Child, Groupon CFO, on an employee call to discuss the IPO.
