NYSE, Nasdaq Vie for Facebook Listing
Daniel Acker/Bloomberg
NYSE and Nasdaq are trying to lure Facebook by promising they will do the most to raise its profile, according to William Hambrecht, chairman and founder of San Francisco-based investment bank WR Hambrecht Co. and a four-decade veteran of public offerings by Silicon Valley companies.
NYSE and Nasdaq are trying to lure Facebook by promising they will do the most to raise its profile, according to William Hambrecht, chairman and founder of San Francisco-based investment bank WR Hambrecht Co. and a four-decade veteran of public offerings by Silicon Valley companies. Photographer: Daniel Acker/Bloomberg
Facebook Yet to Friend Exchanges
Scott Eells/Bloomberg
Hiring former Google and McKinsey Co. executive Sheryl Sandberg in 2008 was a bid by Facebook CEO Zuckerberg to convey an image of maturity, said Sam Hamadeh, CEO of New York-based PrivCo LLC, a New York-based provider of financial data for closely held companies.
Hiring former Google and McKinsey Co. executive Sheryl Sandberg in 2008 was a bid by Facebook CEO Zuckerberg to convey an image of maturity, said Sam Hamadeh, CEO of New York-based PrivCo LLC, a New York-based provider of financial data for closely held companies. Photographer: Scott Eells/Bloomberg
Facebook Inc. has chosen its
underwriters. Now it needs to pick a place to trade.
NYSE Euronext and Nasdaq OMX (NDAQ) Group Inc., rivals for almost
every initial public offering in America, are competing now for
what may be the biggest ever by a technology company. Winning it
means more fees, a boost in trading and the chance to link their
brand with the largest social networking site in the world. No
decision on where the shares will list has been announced.
For Robert Greifeld, chief executive officer at Nasdaq OMX,
reputation is at stake after his market became synonymous with
computer and Internet companies through offerings by Google
Inc., Apple Inc. and Microsoft Corp. NYSE’s Duncan Niederauer is
trying to salvage a year in which his stock lost 30 percent and
European regulators recommended blocking the $7.3 billion merger
with Deutsche Boerse (DB1) AG.
“It should be the IPO of the year,” said Lawrence Creatura, a Rochester, New York-based money manager at Federated
Investors Inc., which oversees $350 billion. “This is a marquee
name in a world where those are scarce. We’re not creating a lot
of Facebooks these days so it would be extraordinarily valuable
for an exchange.”
Richard Adamonis, a spokesman for NYSE Euronext, and Frank De Maria, of Nasdaq OMX, declined to comment on the listing.
Jonathan Thaw, a spokesman for Facebook, declined to comment.
Hiring Underwriters
Facebook chose Morgan Stanley to lead the IPO, four people
with knowledge of the matter said yesterday. The Menlo Park,
California-based company will file plans today to raise $5
billion, though the amount may rise, two people said. Goldman
Sachs Group Inc., JPMorgan Chase Co., Barclays Plc and Bank of
America Corp. will help manage the sale, people said.
Should it increase, Facebook’s IPO could be the biggest
ever by an Internet or technology company, data compiled by
Bloomberg show. The debut of Infineon Technologies AG (IFX) for $5.85
billion in 2000 is the largest to date.
NYSE and Nasdaq are trying to lure Facebook by promising
they will do the most to raise its profile, according to William Hambrecht, chairman and founder of San Francisco-based
investment bank WR Hambrecht Co. and a four-decade veteran of
public offerings by Silicon Valley companies.
“It usually comes down to who’s willing to put the most
promotional money out,” Hambrecht said in a phone interview.
“You pay for advertising and that type of thing. There’s always
a lot of advertising around the offering and listing and that’s
about the only way they compete from a cash point of view. They
both do it.”
LinkedIn, Pandora
The New York Stock Exchange made inroads into Nasdaq Stock
Market’s technology dominance last year by capturing LinkedIn
Corp. (LNKD) and Pandora Media Inc. Convincing Facebook would help
focus investors after a year in which NYSE Euronext (NYX)’s market
value fell from about $10 billion to $7 billion, said Creatura.
European regulators may vote as early as today to prohibit
NYSE Euronext’s agreement to merge with Deutsche Boerse. The
proposal is opposed by antitrust officials because it would put
90 percent of Europe’s exchange-traded derivatives in the hands
of one company. NYSE Euronext shares tumbled 30 percent since
the companies said they were in talks on Feb. 9, 2011.
“They could use a ray of sunshine,” Creatura said. “It
would be therapeutic to have a fresh chapter to help get back on
track strategically after the merger situation.”
Winning Deals
NYSE Euronext won 56 percent of U.S. initial offerings in
2011 and has claimed more than half every year since 2008,
according to Ipreo Holdings LLC, which provides markets data and
analytics. The company accounted for 74 percent of IPO proceeds
each year on average since 2001, according to the data.
Co-founded by Mark Zuckerberg in 2004 in a Harvard
University dorm room, Facebook has amassed more than 800 million
users with a website that lets anyone with an Internet
connection construct profile pages, post video and photos and
interact with friends.
Hiring former Google and McKinsey Co. executive Sheryl Sandberg in 2008 was a bid by Facebook CEO Zuckerberg to convey
an image of maturity, said Sam Hamadeh, CEO of New York-based
PrivCo LLC, a New York-based provider of financial data for
closely held companies. An NYSE listing could be another.
“It’s going to be at the Big Board,” Hamadeh said in a
phone interview. “They want to position themselves as a blue-
chip name.”
More to Lose
Nasdaq OMX has more at stake because of the perception it
gets all the technology companies, said Jamie Selway, head of
liquidity management at New York-based Investment Technology
Group Inc. Zynga Inc. (ZNGA), the online-game developer, and Groupon
Inc., the daily-deal site, listed shares on Nasdaq last year.
“The Intels, Microsofts and Apples all IPO’d on Nasdaq and
stayed with Nasdaq,” Selway said in a telephone interview. “By
those lights, Facebook going to NYSE versus Nasdaq would be a
hit,” he said. “Because of the expectation that Nasdaq would
get Facebook, maybe Nasdaq has got more to lose.”
Today’s filing may not answer the question of who gets the
listing. Groupon (GRPN), LinkedIn, Pandora and Zynga all left the name
of the primary exchange out of initial documents. When Google
went public in 2004, it didn’t disclose the name, either.
NYSE Euronext charges more for companies to list, with an
initial fee of $125,000 to $250,000 and annual payments from
$38,000 to $500,000. About 80 percent of NYSE companies paid
$199,000 or less annually, Adamonis said. Nasdaq OMX’s initial
listing fee for IPOs ranges from $35,000 to $99,500 for its
highest tier of companies, and its annual fee is $35,000 to
$99,500.
Listing Revenue
While listings bring in less than a quarter of net revenue
and even less of profit for NYSE Euronext and Nasdaq OMX, the
exchanges fight to bring in IPOs because it leads to more
trading and brand value, according to Larry Tabb, founder of
financial-market research and advisory firm Tabb Group LLC.
Listings accounted for 16 percent of NYSE Euronext’s net revenue
in the third quarter and 22 percent of Nasdaq OMX’s.
“Trading volume increases either way,” Tabb said. “The
other thing is how much will Nasdaq or New York benefit from a
halo effect of the other IPOs.”
Tabb said Facebook’s trading may translate into about
$500,000 to $1 million in trading revenue per year, split among
the exchanges and other trading venues. That means that whether
Facebook lists with NYSE Euronext or not, the exchange could get
an additional $260,000 in trading and market data revenue alone.
NYSE Euronext traded 34 percent of its listed companies in
December, and Nasdaq OMX’s three exchanges traded 16 percent of
those stocks, according to data from Barclays. NYSE Arca
accounted for 12 percent of Nasdaq-listed companies, and Nasdaq
OMX had 31 percent, the data show.
“Facebook’s going to come out of the gate as almost a Dow
industrial (INDU) sized-stock,” Tabb said in a Jan. 30 phone
interview. “This is not your crazy cousin’s startup. Each of
the different organizations has a different set of perks and
services that they offer their listing organizations, but
increasingly it becomes one around brand. Do you want to brand
with Nasdaq, or NYSE?”
To contact the reporter on this story:
Whitney Kisling in New York at
wkisling@bloomberg.net
To contact the editor responsible for this story:
Nick Baker at
nbaker7@bloomberg.net