Groupon IPO oversubscribed – starting at US$20 a share

4 Nov 2011

In what some say is going to be the biggest internet IPO since Google, daily deals site Groupon’s IPO today is already oversubscribed and the company’s valuation appears to edging towards US$13bn.

Earlier this week, we reported that Groupon, which IPOs today with the symbol GRPN, was valued at US$11.4bn – half of the US$25bn it was envisaged to be worth in June – and that it was expected to release 30m shares of Class A stock.

The IPO is understood to be 10 times oversubscribed and the company is going to release an extra 5m shares, resulting in 35m shares in the Chicago company being released.

Groupon shares are likely to debut at US$20 a share when trading begins, valuing the daily deals site at US$13bn.

The e-commerce company was likely to raise US$540m with the issuance of 30m shares, but the extra 5m shares might enable it to raise close to US$700m.

In 2004, search giant Google raised US$1.65bn in an IPO that valued it at US$23bn.

In May this year, business social networking site LinkedIn’s IPO in May gave it a valuation of around US$8bn. Shares in LinkedIn began trading at US$45 and rose to US$122.70 on its first day of trading.

Groupon – a play on the words group and coupon – brings business directly to the door of local businesses. Earlier this year, it spurned a US$6bn offer from Google.

Groupon works by using the web to enable groups of individuals to buy products in bulk. The site makes a daily offer to every community in the 230 markets it is active in. If a certain number of people sign up for the offer, the deal becomes available for all.

The site has more than 20m subscribers and plans to serve 300 cities worldwide by this year’s end. Groupon also has seminars and a training programme for merchants who have reported being overwhelmed by the amount of business the site has sent their way.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years