Facebook could top $100bn valuation

The team of elite bankers working on Facebook's $5bn-plus share sale will seek investors from around the world as they attempt to push the social networking giant over the $100bn valuation bar.

The hotly-anticipated Facebook prospectus, finally published last night, revealed plans to approach institutional investors in the UK, Continental Europe, Hong Kong and the Middle East as well as US firms, ahead of a flotation pencilled in for the final week of May.

The stock offering will make paper billionaires of Mark Zuckerberg, chief executive, and his co-founders and financial backers, as well as creating hundreds of millionaires out of friends and early employees of the company. Facebook published no estimates for its valuation, but the decision to limit the share sales to a maximum of $5bn - at least in the first draft - suggested that bankers were willing to create a scarcity of demand to push up the price.

Trading of Facebook shares on private markets in recent months have indicated a possible range of $75bn-$100bn.

But jousting over the likely valuation of the company began immediately on publication of the 199-page prospectus, with investors poring over previously secret financial details that some said raised doubts over Facebook's medium-term growth trajectory. Bears seized on news that advertising revenue growth slowed from 145 per cent in 2010 to 69 per cent in 2011.

And the company revealed that in major markets including the UK and the US it had signed up 60 per cent of the population as regular users, suggesting that future growth would have to come from persuading users to spend more time on the site.

Retail investors, who are likely to be locked out of the initial public offering (IPO) and will have to buy in after the flotation, were warned that Facebook remains a high-risk punt. Andrew Stoltmann, a Chicago securities lawyer, said that on a multiple of earnings, Facebook could be "three times more expensive than Google was at its IPO, and nearly 40 times more expensive than the average large IPO of the last four decades."

Morgan Stanley was appointed by Facebook to coordinate the flotation, with assistance from a smaller-than-usual group of rival banks. Goldman Sachs, which raised $1.5bn for Facebook last year, will take a subordinate role, along with JP Morgan, Barclays Capital, BofA Merrill Lynch and Allen & Co. The firms will share in fees that could top $100m. There was no role for Citigroup, which worked on the flotation of Groupon last summer, or for Credit Suisse.