Snapchat Par­ent Plans to Raise $3.2 B at a Val­u­a­tion of $18.5 B

Ear­lier, the com­pany was ex­pected to be val­ued at be­tween $20 bil­lion and $25 bil­lion

The Economic Times - - Around The World -

New York: Snap Inc, owner of the pop­u­lar mes­sag­ing app Snapchat, is seek­ing a val­u­a­tion of be­tween $16.20 bil­lion and $18.50 bil­lion in its highly awaited ini­tial pub­lic of­fer­ing. The com­pany, which filed for an IPO ear­lier this month, was widely ex­pected to be val­ued at be­tween $20 bil­lion and $25 bil­lion, giv­ing it the rich­est val­u­a­tion in a US tech­nol­ogy IPO since Face­book Inc.

“I think that the lower pro­posed val­u­a­tion ref lects feed­back from in­sti­tu­tional in­vestors that the higher val­u­a­tion is hard to jus­tify,” Jay Rit­ter, IPO ex­pert and pro­fes­sor at the Uni­ver­sity of Florida, told Reuters. “The con­cerns are about Snap, not the IPO mar­ket.”

In­vestors have raised con­cerns about com­pe­ti­tion from Face­book and Al­pha­bet Inc’s Google, widen­ing losses and the firm con­trol of its founders even as the Venice, Cal­i­for­nia-based com­pany read­ies to hit the road to pitch the of­fer­ing.

Snap said in a fil­ing on Thurs­day that it ex­pects to raise as much as $3.2 bil­lion from the of­fer­ing of 200 mil­lion Class A share. The of­fer­ing is ex­pected to be priced be­tween $14 and $16 per share.

Sell­ing share­hold­ers will sell 55 mil­lion shares and the re­main­ing

Evan Spiegel and Bobby Mur­phy each plan to sell 16 mil­lion Class A shares $25 b could each take home as much as mil­lion af­ter the IPO

Snap said it ex­pects to use pro­ceeds of about for gen­eral cor­po­rate pur­poses and to ac­quire busi­nesses, among other things will be sold by the com­pany.

Snap will have about 1.16 bil­lion shares out­stand­ing af­ter the of­fer­ing and list on the New York Stock Ex­change un­der the sym­bol SNAP.

“Snap is right to be con­ser­va­tive in set­ting the ini­tial range. They want to avoid set ti ng a ra nge and then price be­low the range,” $16 b

both founders will main­tain an con­trol over the votes

ex­pected to be priced be­tween and per share said Kath­leen Smith, prin­ci­pal at Re­nais­sance Cap­i­tal, which man­ages IPO-fo­cused ex­change traded funds.

Snap­saidi­t­ex­pect­stouse­pro­ceeds of about $2.1 bil­lion for gen­eral cor­po­rate pur­poses and to ac­quire busi­nesses, among other things.

Snap, which launched in 2012 with an app that sends dis­ap­pear­ing mes­sages, re­branded it­self last year as a cam­era com­pany and started sell­ing $130 video cam­era glasses.

Rev­enue surged to $404.48 mil­lion for year ended Dec. 31. How­ever, net loss widened to $514.64 mil­lion from $372.89 mil­lion a year ear­lier, hurt by higher costs.

Snap’s co-founders Evan Spiegel and Bobby Mur­phy will hold 14.5% of Class A shares each, af­ter the of­fer­ing, down from 21.8%.

The founders will main­tain tight con­trol over Snap’s stock through a unique three-share class struc­ture.

The struc­ture will give Spiegel and Mur­phy the right of 10 votes for every share. Ex­ist­ing in­vestors will have one vote for each of their shares, while new in­vestors will have no vot­ing rights. Face­book’s In­sta­gram, which re­cently in­tro­duced dis­ap­pear­ing video con­tent, had 600 mil­lion users as of late last year. Like Snapchat, In­sta­gram sells ad­ver­tis­ing on its plat­form. Mor­gan St a n ley & Co LLC, Gold­man Sachs & Co, JP Mor­gan Se­cu­ri­ties LLC, Deutsche Bank Se­cu­ri­ties Inc, Bar­clays Cap­i­tal Inc and Credit Suisse Se­cu­ri­ties (USA) LLC are among the un­der­writ­ers to the IPO.

Of the tech­nol­ogy IPOs since 2007, Snap’s of­fer­ing is poised to trail only Alibaba Group Hold­ing’s share sale and Face­book’s raise

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