Groupon IPO – Groupon Inc. relied on some of Silicon Valley’s top bankers to pull off a $700 million IPO. The company pitched the offering to investors just as stock swings widened in reaction to Europe’s debt crisis.
The company’s valuation had tumbled since March, when a $25 billion price tag was discussed with bankers, people familiar with the matter said at the time. Since filing to go public, the Chicago-based business came under scrutiny from regulators about its accounting, restated results and lost executives.
“Marketing any type of risky asset in this type of environment would require some pretty good salesmanship,” said Walter Todd, co-chief investment officer at Greenwood, South Carolina-based Greenwood Capital, which oversees about $940 million.
Morgan Stanley (MS) is the No. 1 underwriter of IPOs globally this year, while Goldman Sachs and Credit Suisse place third and fourth, respectively, data compiled by Bloomberg show. Morgan Stanley led Groupon’s sale, giving it top billing on 7 of the 10 biggest technology IPOs by offer size this year, including LinkedIn Corp., Pandora Media Inc. and Fusion-io Inc., filings show.
Groupon and its banks priced the offering yesterday at $20 a share, above the $16 to $18 the company originally sought, to raise $700 million. The shares begin trading today on the Nasdaq Stock Market under the symbol GRPN.
The company offered a smaller percentage of shares than typical in an IPO, a strategy that banks use to stoke demand and help a company achieve the valuation it’s seeking. They had planned to offer 4.7 percent of its stock, less than in any U.S. Internet-company IPO of more $200 million since at least 2000, Bloomberg data show. It ended up selling 5 million more shares than the 30 million it had planned.
“This model of the low float creating its own demand has worked,” said Greenwood’s Todd.
Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. The site was launched in November 2008, the first market was Chicago, followed soon thereafter by Boston, New York City, and Toronto. As of October 2010, they serve more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users.