Bloomberg News

Groupon Said to Offer Role to More Banks in Initial Offering

June 10, 2011

(Adds JPMorgan declines to comment in fifth paragraph.)

June 10 (Bloomberg) -- Groupon Inc., seeking to raise $750 million in an initial public offering, asked six more banks to help underwrite the sale, including Barclays Plc and JPMorgan Chase & Co., said two people with knowledge of the situation.

Citigroup Inc., Deutsche Bank AG, Bank of America Corp. and Allen & Co. were also offered a role, said the people, who declined to be identified because the decision isn’t public. Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse Group AG are leading the IPO, a June 2 filing said.

Investment banks are racing to win assignments to handle a surge of technology IPOs and the lucrative fees associated with them. Lead banks have earned an average fee of 5.2 percent on U.S. IPOs this year, compared with 0.6 percent for corporate bond sales, Bloomberg data show.

Groupon, the top provider of daily deals online, is following LinkedIn Corp., Yandex NV and Renren Inc. in raising money from public markets. LinkedIn, the biggest professional- networking site, was the first major U.S. social-media company to sell shares to the public. Its stock more than doubled in the first day of trading, though it has pared its gains since then.

Julie Mossler, a spokeswoman for Groupon, didn’t immediately respond to an e-mail seeking comment. Spokespeople from Citigroup, Deutsche Bank, Barclays, Bank of America and JPMorgan declined to comment. Allen & Co. couldn’t be reached for comment.

Operating Losses

While Groupon’s sales surged 14-fold to $644.7 million last quarter, the company has racked up operating losses of $540.2 million since its founding in 2008. Groupon also faces competition in the market for daily coupons from hundreds of rivals, including LivingSocial.com, as well as recent entrants Google Inc., Facebook Inc. and Yelp Inc.

The Chicago-based company will trade under the ticker GRPN, according to the filing.

Groupon delivers daily discounts on hotels, restaurants and other goods and services to 83.1 million subscribers. The daily- deal market pioneered by Groupon may generate $3.9 billion in U.S. sales in 2015, from $873 million in 2010, according to research firm BIA/Kelsey in Chantilly, Virginia.

To handle the growth, Groupon bolstered its workforce to 7,107 employees as of March 31, from 37 in June 2009. Revenue per sales representative in the first quarter was $172,000 a month, up from $87,000 two years earlier, the company said.

--Editors: Nick Turner, Tom Giles

To contact the reporter on this story: Serena Saitto in San Francisco at ssaitto@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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