Groupon Inc. may increase the?price range?of its initial public offering amid higher-than-expected demand for the shares from investors, people with knowledge of the matter said.
An updated filing with a higher range may be filed with the US Securities and Exchange Commission early next week should Groupon decide to increase the price, said one of the people, who declined to be identified because the information is confidential.
Groupon had previously filed with regulators to sell 30 million shares at $16 to $18 apiece, scaling back its aspirations amid weak market conditions and uncertainties over its long-term business outlook.
Since Groupon first filed a proposed price range last week its Dow Jones Industrial Average has risen 6%.
Bankers are telling potential investors that Groupon’s revenues are likely to grow about 40% annually over the next two years, a projection to support the view that the discount deal service deserves the proposed valuation.
Groupon is floating a record-low percentage of its total outstanding shares in the offering, helping to stoke demand for the stock. Only 4.7 percent of the unprofitable company?s shares will be sold to the public. The company is pitching the IPO to investors and aims to complete the offering on 3 November, the data suggested.
?I?m sure that it?s going to be fully subscribed,? said Brett Harriss, an analyst at Gabelli & Co. in Rye,?New York, who was one of about 400 people attending the Groupon investor conference in New York Friday. ?It?s a thin stock to start and, despite the recent criticism, they tell a good story.?
Julie Mossler, a spokeswoman for Chicago-based Groupon, declined to comment on the stock offering.
According to Paul Deninger, a senior managing director at investment bank Evercore Partners Inc.,?investors receive shares worth 20 percent to 25 percent of the company in a typical IPO.
?AMAZON AND MICROSOFT
A rising stock market can encourage companies to expand their offerings. The Standard & Poor?s 500 Index rallied 17 percent from Oct. 3 through Oct. 27, when volatility hit a two- month low.
By selling at a higher price, Groupon would become even more expensive than?Amazon.com Inc. and Microsoft Corp. The current price range values the company at about five times projected 2012 sales, people familiar with the matter said last week. That compares with 2.9 for Microsoft and 1.5 for Amazon.com, according to data compiled by Bloomberg.
Groupon reported a net loss of $10.6 million attributable to the company in the three months through September, bringing losses in the first nine months of the year to $214.5 million, according to its filings.
LaShou Group Inc., the Chinese operator of a daily-deal website, filed Friday to raise $100 million in a US initial public offering. The Beijing-based company will offer American depositary receipts that will trade on the Nasdaq Stock Market under the symbol LASO.
Chief Executive Andrew Mason hosted a luncheon on Friday at the St. Regis hotel in Manhattan — the biggest event on the roadshow, seen as crucial in helping Groupon’s bankers decide how to price the shares.
Fund managers who attended the meeting told Reuters they were pleasantly surprised by how charming and composed Mason was, since he has a reputation of being volatile after he blasted Groupon’s critics in a leaked staff memo this summer.
Nonetheless, quite a few investors said they were still undecided about buying into the IPO, noting that Groupon faces huge competition in the daily deals business. The company has also had to change its accounting twice under regulatory pressure and has lost two chief operating officers in the past year.
Mason “was a lot more likable, less arrogant in person than I expected,” said a money manager at a firm with more than $15 billion under management, who attended the Friday meeting.
Executives and bankers are scheduled to meet with investors in San Francisco, Denver and Chicago next week.
Underwriters on the Groupon IPO are being lead by Morgan Stanley, Goldman Sachs and Credit Suisse. The shares are expected to start trading on the?Nasdaq?on 4 November under the ticker symbol “GRPN.”
Sources: Bloomberg, Reuters, WSJ