30 December 2011

Facebook and Yelp to Make 2012 the Biggest IPO Year

2012 is going to witness the biggest Initial Public Offerings by Internet companies in US since 1999, as a number of companies line up for going public.


Facebook and Yelp are expected to guide US to the big IPO year. Facebook, the social giant is planning to go public in the second quarter of 2012. The regulatory filings shows that at least 14 web related companies are planning sales, making the industry to raise $11 billion next year. That would be the biggest since 1999 when IPOs offered $18.5 billionIn 2011, the IPO’s have declined 38 percent compared to the previous year.
Facebook


According to David Erickson, global co-head of equity capital markets at BarclaysPlc, "Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop. You might see more IPOs emerge if we get stability that makes investors more comfortable with the overall market."


The companies may reduce the valuations for the initial offerings after Pandora, an online radio company and Zynga, the largest game developer for Facebook slumped following the sales this year. Zynga had collected $1 billion from initial offerings this year.


In the case of global performance, US companies generated initial offering of $38.8 billion this year, which is 10 percent less than 2010. Europe witnessed a fall more than 95 percent from August after a gradual raise in the year beginning. The global trend was also visible in Asia with the IPOs raised $79.2 billion, compared to the $176.5 billion last year.


Facebook is planning on a $10 billion offering that would value the company at more than $100 billion. According to Debra Aho Williamson, an analyst at EMarketer, the sales of Facebook may surge 52 percent to 62 percent from 2011’s projected $ 4.7 billion through revenue from ad’s.


The companies including Yelp, which is a consumer review based operator and ExactTarget Inc. an email marketer, filed for IPOs in November. The aggressive growth rates may attract the investors to Facebook but the factors like Europe’s Debt crisis and the heightened stock volatility could tamper the pace, according to the data compiled by Bloomberg.


Morel, the Paris-based global head of equity capital markets said, “Technology IPOs are definitely the theme, with lots of hot names like Zynga coming to the market, but if you look at their performance, most of them are struggling. Next year will be the real test”.