Facebook to file for $5bn IPO today as it selects Morgan Stanley

Facebook has chosen Morgan Stanley as the lead investment bank on its initial public offering and will file plans with the US Securities and Exchange Commission today. It is being reported that Facebook intends to raise around $5bn although that could rise to $10bn, which will value it at between $75bn and $100bn.

The appointment of Morgan Stanley means a considerably payday for the bank in what will be the biggest and most talked about IPO since Google in 2004.

The IPO is set for May and will even at the lower estimates far outstrip Google’s $2bn IPO six years ago.

The New York Times notes that at $5bn the size of the offering is small on the back of speculation that Facebook could ask for as much as $10bn.

However, the lower amount is in keeping with Groupon and Zynga, which also “initially sought small fund-raising amounts, only to raise those targets after gauging investor demand”.

“Should Facebook expand the size of the stock sale to that expected $10 billion, the I.P.O. will be the biggest technology offering in history, according to data from Thomson Reuters. The current record holder is Infineon Technologies’ debut, which raised nearly $5.9 billion in 2000, the NY Times reports.

According to Bloomberg while Morgan Stanley as the lead role Goldman Sachs Group Inc., JPMorgan Chase & Co, Barclays and Bank of America Corp will help with the sale.

“Getting picked for the IPO is a coup for Morgan Stanley and Michael Grimes, the global co-head of the bank’s technology investment banking unit. The securities firm won the biggest share of business underwriting U.S. initial offers by Internet companies last year, data compiled by Bloomberg show. Taking the lead on Facebook may catapult the New York-based bank to the top of the U.S. IPO league table for a third year running.

“This means a huge windfall for them,” said Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank. “The fact that they have led so many high-profile social media deals in the last year is proof positive that Morgan Stanley (MS) is most likely to be able to get this deal done,” Bloomberg reports.

Not only will the IPO prove a big financial win for Morgan Stanley it will cement its recent internet and social networking experience it picked up after working with both Groupon and Zynga. It was those two IPOs that helped it take pole position on Facebook’s flotation after fierce competition for the role from rival Wall Street institutions.

Facebook’s market debut has whipped up massive interest and it has helped push up shares in rival social networking firms RenRen and LinkedIn.

According to the Wall Street Journal a $10bn Facebook offering would rank fourth among IPOs for U.S. companies:

“Behind Visa Inc, General Motors and AT&T Wireless, according to Dealogic. It would rank Facebook as the biggest U.S. Internet offering ever, replacing Google Inc., which raised $1.9 billion in 2004 at a $23 billion valuation.

“At a $100 billion valuation, Facebook would be worth about the same as McDonald’s Corp. and nearly half of Google,” the WSJ reports.