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Facebook is set to file its initial public offering (IPO) as early as Wednesday, seeking a valuation between US$75 billion and US$100 billion, according to the Wall Street Journal, citing unnamed sources.

Mark Zuckerberg
(Credit: James Martin/CNET)

The company is reportedly seeking to raise as much as US$10 billion. If successful, that would make Facebook’s offering the sixth largest US IPO and six times larger than Google’s initial offering, which is currently the record-holding tech IPO, according to Renaissance Capital (see chart below).

The Journal reported that Morgan Stanley is close to securing the leading underwriting role, with Goldman Sachs also playing a key role. Both banks declined to comment. Facebook also declined to comment.

Another indication that an IPO filing looms comes from SecondMarket, the private company that runs a market for shares of private companies. Facebook is the most actively traded private stock on SecondMarket, and on Wednesday Facebook’s law firm, Fenwick West, reportedly halted trading in Facebook shares.

SecondMarket declined to comment.

While 2011 saw a resurgence of tech IPOs — with companies like LinkedIn, Pandora, Groupon and Zynga all going public — Facebook is the 800-pound gorilla everyone has been waiting for. Facebook now claims more than 800 million members, with 500 million users logging into the site daily. Its founder and CEO, Mark Zuckerberg, made famous by the movie The Social Network, is already one of the richest people on the planet. He started Facebook in his Harvard dorm room eight years ago.

The battle among Wall Street banks to take Facebook public is fierce because of the fat underwriting fees that come with such a deal. If Morgan Stanley snags the lead role it would be a big blow for Goldman Sachs. In January 2011, Goldman orchestrated a $1.5 billion private offering of Facebook shares, leading market watchers to speculate that Goldman would naturally lead the public offering as well.

One of the biggest winners in a successful IPO — besides Zuckerberg himself — would be the Russian entrepreneur Yuri Milner, who runs the investment group DST that together with its sister companies owns an estimated 10 per cent of Facebook. Milner also owns stakes in Zynga, Twitter and Groupon.

Zuckerberg, who is 27, has long said that he wanted to keep Facebook private, and it certainly says something about his drive and motivation that in 2006 he turned down an offer from Yahoo to acquire Facebook for US$1 billion.

That said, Facebook has grown so fast that it’s now running up against an SEC rule that would make it tricky for Facebook to shield its financials from public scrutiny. When a company has more than US$10 million in assets and more than 500 shareholders, the SEC requires it to disclose detailed financial results every quarter. The deadline for Facebook to comply with that rule is coming up in April. That same issue is what led Google to go public in 2004, less than six years after it launched.

Sean Parker, who was Facebook’s first president and in November said he owns about 5 per cent of Facebook, told CNBC that Zuckerberg has done a good job holding off going public.

“It’s somewhat interesting and ironic that Zynga, which was built on Facebook’s platform, went public before Facebook,” said Parker. “It really speaks to Mark’s desire to keep the company private as long as possible and build the company in that environment.”

Putting off the IPO until this year also could help amp up the demand, which Parker predicts will be huge.

“To the extent that there is any bubble in technology at all, it is really a bubble around Facebook in the sense that there is a huge amount of pent-up demand among retail investors for access to Facebook equity,” said Parker.

Via CNET