July 8 (Bloomberg) -- LivingSocial, the second-largest daily-coupon site, is close to hiring JPMorgan Chase & Co., Bank of America Corp. and Deutsche Bank AG to manage its initial public offering, a person with knowledge of the talks said.
The Washington, D.C.-based startup is expected to make a formal appointment in the next three weeks, though negotiations with any of the banks could fall through, said the person, who asked not to be identified because the talks are private.
LivingSocial is seeking to raise about $1 billion in an IPO this year, a person familiar with the matter said last week. It aims to capitalize on surging demand for shares of Internet companies after LinkedIn Corp., Yandex NV and Pandora Media Inc. have each gained at least 20 percent since raising money in public markets this year. Groupon Inc., the leader in delivering daily coupons, filed in June 2 for a $750 million IPO.
Morgan Stanley and Goldman Sachs Group Inc. are not contenders to handle LivingSocial’s share sale because of their involvement in Groupon’s IPO, said the person familiar with the decision.
CNBC reported earlier today that LivingSocial had picked JPMorgan, Bank of America and Deutsche Bank as underwriters. Maire Griffin, a spokeswoman for LivingSocial, declined to comment. John Yiannacopoulos, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment, as did Tasha Pelio at New York-based JPMorgan and Scott Helfman, a New York-based spokesman for Germany’s Deutsche Bank.
LivingSocial, led by co-founder Tim O’Shaughnessy, raised $400 million in April, valuing the company at $3.5 billion, two people said at the time. The company will generate $1 billion in revenue in 2011, they said.
The company is tripling its workforce to 1,800 this year and plans to more than double the cities where it offers deals to 300, O’Shaughnessy said in an interview in December. Groupon has more than 7,000 employees and sells coupons in more than 500 cities. LivingSocial had 24 percent of online daily deal revenue in top North American markets in May, according to a study released last month by Yipit. It gained 4 percentage points from a month earlier, while Groupon lost 4 points, to 48 percent.
The companies deliver daily discounts on restaurants, hotels, events, and other goods and services. The daily-deal market may generate $3.9 billion in U.S. sales in 2015, compared with $873 million in 2010, according to research firm BIA/Kelsey in Chantilly, Virginia.
Investors in LivingSocial include Twitter Inc. backer Institutional Venture Partners, as well as T. Rowe Price Group Inc., Lightspeed Venture Partners, Revolution LLC, Grotech Ventures and U.S. Venture Partners. Amazon.com Inc. invested $175 million in LivingSocial in December.
--With assistance from Lee Spears in New York. Editors: Tom Giles, Nick Turner.
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