Which investors will be friends of Facebook? |
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01 Feb 2012 |
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It seems at long last the much anticipated IPO of social network site Facebook is upon us. Everyone will want a piece of this company, but after all the dust has settled, who are the investors likely to be? Recent tech valuations and IPOs provide good guidance. Facebook’s current shareholder base is made up of employees and co-founders, notably Mark Zuckerberg, along with PE/VC and angel investors, including Greylock Partners, Meritech Capital, Accel Partners, Peter Theil, and Reid Hoffman (angel investor and partner at Greylock). Tech giants Microsoft and Digital Sky Technologies hold strategic investments, but the only Wall Street firm to currently hold a stake is Goldman Sachs. Reid Hoffman specializes in tech investments; he is co-founder in LinkedIn Corp and also holds a stake in recently IPOed games site Zynga. We can view his stakes in public companies using FactSet Ownership.
Let’s take a closer look at the investor base of Zynga’s recent IPO, the biggest offering since Google in 2004. We can see that some of the largest U.S. buy-side institutions, including Morgan Stanley, Capital Research, JPMorgan, and T Rowe Price, now own close to 50% of the stock. Kleiner Perkins, the venture capital firm, retains a stake of almost 12%. If we examine the entire portfolios of these U.S. investors, we can see that Technology Services represents 6.5% of their combined portfolios – with T Rowe Price having the largest amount invested in the specialist Internet Software/Services industry, in which Zynga falls.
To get an idea of how the shareholder base of tech companies changes over time, let’s look at the historical trend in Google’s institutional investor base since its IPO in 2004, which at the time was the largest tech IPO.
In 2005, Google issued more shares, so all investors’ % of shares held effectively went down, hence the reduction in %OS figures for 2005. Nearly all investor types have been steadily building up their positions in Google. From traditional investment adviser firms to pension funds and sovereign wealth managers.
So, who should the book runners on Facebook’s IPO be targeting? It appears that the top investors in Google have the appetite.
These are the top investment buy-ins over the last 12 months for Google. With the recent IPOs of Silicon Valley start-ups Zynga, LinkedIn, Groupon, and Pandora, investors are wary that this could be the second tech bubble. Time will tell how Facebook fairs in its offering. Will it follow Google, which has seen its share price increase almost seven-fold from $85 (at IPO) to $584 currently and its market value from $27Bn (at IPO) to $190Bn with investors’ appetite to hold the stock as strong as ever? FactSet clients: Launch these reports in Ownership 2.0. Receive stories like this to your inbox as they are published. Subscribe by e-mail. |
