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Facebook set to file $5 billion IPO

FACEBOOK IS SET to file papers with US regulators later today and make a $5 billion initial public offering, according to numerous reports.

The social networking giant has selected Morgan Stanley and four other book-runners including Bank of America, Merrill Lynch, Barclays Capital and JP Morgan to handle the IPO, targeting a sale of $5 billion of shares, according to Reuters which cites IFR.

The website is valued at up to $100 billion so the initial $5 billion target could be ramped upwards in the coming months if there is investor demand. Reuters says this ‘coming-out party’ would likely dwarf tech rival Google’s IPO of $2 billion.

Mark ZuckerbergMark Zuckerberg
Image: Paul Sakuma/AP/Press Association Images

Analysts expect it to be the biggest market debut in US history.

The public filing has been long anticipated by investors with those who own shares in the company, including founder Mark Zuckerberg, set to become instant billionaires.

Zuckerberg founded the social network in his dorm room at Harvard university eight years ago and currently owns 24 per cent of the company.

U2 duo Bono and The Edge would also likely become billionaires if there is a subsequent full stock market flotation with their investment vehicle owning a 1.5 per cent stake in the site.

The Telegraph reports that going public will provide several challenges for Facebook and its CEO Zuckerberg who will be under pressure to ensure quarterly results meet or exceed expectation among Wall Street investors.

Facebook will need to balance its need to deliver revenue from advertising while at the same time not turning off users who have in the past expressed concerns with how the information it shares with the website is used.

But investors are certainly looking forward to it.

“Pandemonium is what I expect in terms of demand for this stock,” says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm. “I don’t think Wall Street would want to anger Facebook users.”

- additional reporting from AP