Renren Seeks Twice the Value of Facebook in Social-Media IPO


As reported by Bloomberg’s Lee Spears:

Renren Inc., China’s biggest social- networking website by page views, is seeking a valuation more than double that of Facebook Inc. as it aims to raise as much as $743.4 million in a U.S. initial public offering today.

The Beijing-based company is offering 53.1 million American depositary receipts for $12 to $14 each, according to a filing with the U.S. Securities and Exchange Commission. At the midpoint, Renren would trade at 67 times last year’s sales, compared with 25 times for Facebook as valued by Goldman Sachs Group Inc.’s investment in the U.S. company.

Renren is demanding a premium, with China’s economy projected to grow three times faster than the U.S. and about two-thirds of the population not yet online. The company, which also offers games and daily deals for consumers, plans to use the proceeds from the IPO to expand as it faces competition for advertisers and users from local Internet companies Sina Corp. and Tencent Holdings Ltd. (TCEHY)

“You can say it’s overvalued, but people are going to buy it anyway,” said Darren Fabric, a Chicago-based managing director at IPOX Capital Management LLC, which oversees about $2.5 billion and invests in IPOs. “The growth is there, and you’re paying for it big-time.”

Renren and at least 17 other companies worldwide are attempting to raise at least $2.5 billion in IPOs this week, according to data compiled by Bloomberg. In the U.S., April had the most new filings for initial offerings since August 2007, Renaissance Capital LLC, based in Greenwich, Connecticut, said last week.

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