SecondMarket looking to get in on the Groupon IPO?

Faith Merino · November 1, 2011 · Short URL:

SM reportedly emailing people who have previously bought Groupon shares to gauge their IPO interest

Has SecondMarket just become another banker trying to get in on the Groupon IPO?  Looks like it—according to a report from Reuters that claims SVP Jeff Thomas emailed potential investors on Friday to see if they’d be interested in buying shares in the Groupon IPO.

SecondMarket declined to comment, but the Reuters report indicates that SecondMarket will be working with Morgan Stanley—one of Groupon’s underwriters.

Thomas’s email was sent out to people who previously bought Groupon shares on SecondMarket and outlined some of the requirements for buying shares, including the completion of a “suitability questionnaire,” along with an “indication of interest” questionnaire outlining how many Groupon shares they would like to buy.  Investing hopefuls would also be required to speak to one of SM’s market specialists.  The questionnaires and interviews will ultimately determine if the IPO is an “appropriate investment for you.”

But Jeff Thomas also noted in the email that SecondMarket is currently unclear about the securities it will be allocated, so even if it deems potential investors worthy to participate in the IPO, there is no guarantee they will actually be able to get any shares.

The move seems like a bit of a step away from the SecondMarket-as-Alterna-Wall-Street image SM has cultivated.  The platform has grown in popularity as a place where buyers and sellers can trade shares in private companies.  Company employees can sell their shares even if the company hasn’t gone public, and buyers can get a piece of the company prior to its IPO. 

Of course, the question is, will the IPO match or beat what buyers have already paid on SecondMarket?  SecondMarket doesn’t disclose the share prices of private companies on its platform, but a report from Fortune indicates that shares are trading both above and below Groupon’s $11 billion valuation.

Groupon’s IPO is slated for this Friday, when it will debut on NASDAQ under the symbol GRPN.  The company recently priced its shares at $16 to $18 each and expects to raise $540 million—down from the $750 million it initially expected to raise when it filed back in June.

Between January and September of this year, Groupon generated $1.1 billion in revenue while incurring a loss of $214 million.  Translated to quarterly terms, Groupon took home $430.2 million in its third quarter.  In 2010, the company generated $312 million in revenue and suffered a loss of $389 million.


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