Facebook sets price range for IPO

Venture capital and private equity shareholders are poised to generate exorbitant returns with Facebook’s IPO price range, which puts the social media site’s valuation at almost $100bn.

Early venture capital and private equity investors in Facebook are in for a gold mine. The social media titan’s initial public offering prospectus values the company at as much as $96 billion.

In a Thursday filing with the US Securities and Exchange Commission, the company indicated that it will post 180 million of its shares on the NASDAQ stock exchange for between $28 and $35 per share. Facebook did not specify when it would hold its IPO in the prospectus. 

Prominent shareholders include several private equity and venture capital firms whose stakes are expected to net extravagant returns relative to their early investments in the site. Accel Partners, which will sell most of its shares in the IPO, holds an 11.3 percent stake in the company due to its $12.7 million investment in 2005. That investment could now be worth as much as $5.7 billion if the company sells at the top of its price range, according to reports. 

Goldman Sachs, which is also underwriting the IPO, will sell 13.2 million of its 65.9 million Facebook Class A shares for as much as $461 million, according to SEC filings. In January, Facebook raised $1.5 billion from Goldman and investment firm Digital Sky Technologies, an event that valued the company at around $50 billion. 

Other early backers will not be using the IPO as a path to exit, at least immediately. Around 598.4 million Class A and 1.5 billion Class B shares are locked up for a period ranging from 91 days to 366 days of Thursday’s filing. 

Elevation Partners will sell only a fraction of its shares, reducing its overall stake in the firm by less than 1/10th of a percent. Elevation paid €156 million for a 1.5 stake in Facebook in 2010.

Venture firms Greylock Partners and Meritech Capital Partners are also holding onto the bulk of their shares, according to the filing. 

Sky-high valuations contributed to private shares in Facebook being one of the most sought after assets on the secondary market. Exchanges like SecondMarket and SharesPost thrived as investors sought access to shares in the company.