The imminent US$3.3bn IPO of search engine Google – anticipated as the tech flotation of the year – is facing the prospect of being delayed as the company waits for more fund managers to bid on its shares.
The company announced the prospect of delaying the flotation only a day after revelations abounded that Google may have illegally issued shares to current and former employees, prompting a Security and Exchange Commission (SEC) investigation.
Next week’s proposed flotation – expected to portent a much-needed boost to the beleaguered tech investment sector – is now being jeopardised by weaker-than-expected demand that could scupper the entire event.
At least two equity banks have speculated that Google could postpone its IPO based on the SEC investigation and lukewarm interest from investors.
It is understood that fund managers have already balked at the price range of the IPO – US$108 to US$135 a share. This would value the six-year-old search engine at 329 times its 2003 earnings.
About 24.6 million shares are to be sold in the IPO, reveals an amended prospectus filed with the Securities and Exchange Commission. Google plans to sell 14.1 million shares while another 10.5 million shares will be sold by the company’s existing stockholders under the symbol ‘GOOG’.
Some 28 copywriters led by Morgan Stanley and Credit Suisse First Boston will have the option to buy an additional 3.7 million Class A shares in the IPO. Stockholders such as AOL Time Warner and Yahoo! plan to sell 10pc of their respective stakes in the IPO.
By John Kennedy