LinkedIn stakeholders plan to sell 6.7M shares

Krystal Peak · November 15, 2011 · Short URL:

Early investors, officials and LinkedIn all looking to cash in on stock growth

LinkedIn shares (NYSE: LNKD) employees and early investors are planning to cash out of some of their holdings, with Bain Capital selling off its entire stake.

The most recent SEC filing by the business networking company that went public in May, stated that the company itself would sell roughly 1.3 million shares (which would net somewhere near $93 million -- based on the stock price Tuesday) and that company officials and early investors are looking to sell close to 6.7 million shares (approximately $480 million).

Chief Executive at LinkedIn Jeffrey Weiner is among the group looking to sell shares. Weiner has filed to sell near 373,000 shares (approximately $27 million) but will retain at least 2.3 million shares. That's a nice bonus for being at the helm for three years.

LinkedIn stock opened Tuesday at 76.19 and dipped 5% for most of the early trading hours.
If the sales go as stated, this will nearly double the number of LinkedIn shares outstanding to more than 17 million shares.

The Monday evening SEC filing stated that it will use the proceeds of the sales for "working capital and general corporate purposes, including further expansion of our product development and field sales organizations, and for capital expenditures.” LinkedIn also said it may use a portion of the proceeds for acquisitions or investments in “complementary businesses, technologies or other assets.” 

Who's cashing out

Chief Financial Officer Steven Sordello and Senior VP of Product Dipchand Nishar are also selling nearly 100,000 shares a piece in this upcoming transaction.

Bain Capital Venture Integral Investors will be the largest unloader of LinkedIn stock --- 3.7 million shares.

The investing group plans to sell all of its stake in the company that is now 60% higher than its IPO debut at $45. Bain led a $53-million investing round in LinkedIn in 2008 which helped value the company at more than $1 billion.

This unloading announcement as the secondary share market is about it open is not unexpected or uncommon, but will likely lead to some serious action for the company stock, which has seen some amazing growth in the last few months.

Of the investors I have spoken with, none have raised their eyebrows at the LinkedIn annoucement to sell stock after the 180 lock-up period. Some investors do this to capitalize on the gains they have seen and to redistribute the capital to new ventures and other were just looking for shorter investments.

Companies often make the secondary offering annoucement before the 180 expires so that other firms can shore up intrest in their portfolios to grab stock as it becomes available.

The real concern would have been if one or more of the officers were interested in liquidating all of their shares in the company -- that would be a red flag into the inner-workings of the business. But with officers holding a lion's share of the networking site's stock, this activity falls within the normal range of business on the trading floor.

The LinkedIn IPO was the biggest tech debut since Google in 2004, and though the company posted a loss in the Q3, its revenue more than doubled.

The company also announced Tuesday its expansion of research and development in India, according to the Times of India.  The new technology center is expected to go up in Bangalore -- this will be the first center of its kind for the company outside its headquarters in Mountain View, Calif.

LinkedIn is expecting to hire 35 engineers by the end of this year.

The network with more than 130 million professionals using it may see some turbulence on the heels of this announcement but between the continued growth and level of clout in its usership and the flow of announcements of new monitoring ventures (such as the Recruiter Tool and Talent Pipeline), I think the company will weather through the announcement.

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