Groupon Inc is poised to price its initial public offering US$1 to US$2 above its current range, responding to stronger-than-anticipated demand for the biggest US Initial Public Offering (IPO) in months, three buyside sources said on Wednesday.
The daily deals Web site’s chief executive Andrew Mason and his executive team have spent the past week-and-a-half on the road, pitching to investors and addressing criticism about an easily replicable business model, slowing growth and other concerns.
Over the course of the roadshow, the IPO — one of the most closely watched market debuts in years — has drawn more interest because it involves a tiny 4.7 percent float and Groupon will be the first daily deals Web site to go public.
The company is now targeting a price of US$1 to US$2 above the current US$16 to US$18 per share range, according to three investors who said they spoke with lead underwriters.
At US$19, the IPO would value Groupon at US$12.02 billion. At US$20, it would value the company at US$12.7 billion.
“It is many multiple times subscribed,” said Scott Sweet of research firm IPO Boutique. “There is a strong likelihood that Groupon will price above the prevailing US$16 to US$18 range.”
Groupon sells discount coupons for local businesses and takes a cut of the proceeds for brokering the deals. While the market for such companies is booming and growing into a multibillion US dollar industry, Groupon has struggled.
The company, which has never turned a net profit, has changed its accounting practices twice under pressure from regulators and lost two chief operating officers this year.
The firm had scaled back its IPO to raise up to US$540 million, from a previous target of up to US$750 million, amid concerns about the advent of high-powered rivals from Google Inc to Amazon.com Inc.
Those companies have billions of dollars to put in play, while Groupon is expected to have about US$723 million in cash and equivalents after the IPO.
The books closed on Wednesday afternoon. The IPO, one of the smallest floats in the past decade, was scheduled to price late yesterday and the 30 million shares are scheduled to begin trading today on NASDAQ under the ticker GRPN.
No further information was immediately available. A spokesman for Groupon declined to comment. The lead underwriters, Morgan Stanley, Goldman Sachs and Credit Suisse also declined to comment.