If all goes as planned, RenRen, the "Facebook" of China, will go public in the U.S. in early May under the ticker "RENN." It hopes to raise nearly $600 million and be valued at over $11 billion.
On the surface, the company has all the makings of another mega-Chinese initial public offering. It has two of the more prestigious investment banks managing the IPO:Morgan Stanley(MS-commentary-Trade Now) andCredit Suisse(CS-commentary-Trade Now). And, most important, it is a Chinese company involved in the Internet.
It will actually be interesting to see whether -- expecting another hot placement from investors -- the RenRen investment bankers will try to up the offer pricing to capture more value for the listing company, rather than pad the bank accounts of the investment banks' institutional clients. Remember how Dangdang's CEO got into aTwitter-style scuffle onSina's(SINA-commentary-Trade Now) Weibo, supposedly with one of the Morgan Stanley bankers, after their IPO a few months ago? The CEO complained -- among other things -- that the bank hadn't priced the offering high enough to benefit the company's coffers.
With Sina riding sky high these days and new private valuations for Facebook and Twitter seemingly every week, it's hard to see how RenRen doesn't have a great initial pop next week.
The company booked $77 million in revenue last year with an operating profit of $8 million. Though it still had a net loss for the year, revenue grew 64% from the prior year. RenRen describes itself as the leading real-name social networking Internet platform in China, as measured by total page views and total user time spent on social networking websites. RenRen stated in its initial filing with the Securities and Commission that it had 117 million "activated" users at the end of March. It also said that, according to consulting firmiResearch, monthly total page views are 2.3 times higher than those of its closest competitor.
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