Facebook sets richest tech IPO in motion

Facebook on Thursday announced a price of $38 per share for its record-setting initial public offering, which gives the leading social network a market value of $104 billion. The shares will begin trading Friday under the symbol "FB" on the Nasdaq, the company said in a statement announcing the richest-ever technology IPO and second biggest for a US firm. The announcement comes amid keen anticipation among investors for a piece of the world's biggest social network, which grew from a Harvard dormitory project in 2004 to more than 900 million members. Facebook said some 421 million shares of its common stock will be sold at a price of $38 per share. Facebook itself is offering 180 million and holders of previous shares selling 241 million.A so-called over-allotment of up to 63 million shares will be made available to the underwriters, a consortium of investment banks including Morgan Stanley, JP Morgan, Goldman Sachs and others. That will mean one of the biggest IPOs for a US firm, raising between $16 billion and $18.4 billion, behind only that of financial giant Visa in 2008, according to Renaissance Capital. Under the share plan, co-founder Mark Zuckerberg will hold 55.8 percent of the voting power. The 28-year-old controls the firm through a dual class stock structure and certain shares that give him a "proxy" for voting. Wall Street and investors around the globe have been girding for a frenzy for Facebook shares with investors hungry for a piece of the social network's share offering. In the past few days, Facebook boosted the estimated price for the shares, and added to the number of shares being offered from insiders. London bookmakers were anticipating a stampede for shares. At the betting firm Spreadex, clients have been speculating that shares could rise above $56 after their first day. "Our market on the percentage change in the price of Facebook shares after the first day's trading has seen appetite from clients in buying on the price as the big day approaches, moving the spread up from 30-35 percent earlier in the week to 35-40 percent," Spreadex spokesman Andy MacKenzie said Thursday. Spreadex noted that among other tech IPOs, LinkedIn rose 109 percent the first day while Groupon surged 31 percent. Social game maker Zygna lost ground on its first day. But MacKenzie noted that "we have had some customers holding back based on their belief that Facebook shares may well fall in value after the furor over the initial launch has died down." Lou Kerner, founder of The Social Internet Fund, said he expects a strong response. "US institutional demand has been good, the retail and global demand has been overwhelming," he said. London-based Hargreaves Lansdown Stockbrokers said Facebook may have a hard time living up to lofty expectations but pointed out that it is "a relatively developed company which can display 'real' income and profit." "There are extremely high expectations for the company's prospects and perhaps on that basis it deserves the punchy valuation it has been given, the brokerage said in a note to clients. But the brokers said Facebook faces challenges including how to make money from mobile users, which account for half its base. The net proceeds to the company were estimated at $6.4 billion, a filing with regulators said. The rest of the cash would go to Facebook insiders and others who made early investments in the social network, and to cover the IPO costs. The Wall Street Journal said 57 percent of shares will be from insiders, which is an unusually high percentage. Under Wall Street rules, these investors would have to wait six months to sell any shares not offered at the IPO. The excitement about social networks was highlighted separately when Pinterest, a bulletin-board style sharing website, attracted a $100 million investment led by Japanese online giant Rakuten, with existing investors Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, and "a number of angel investors.