Snap, the US-based social media company backed by internet groups Alibaba, Tencent and Yahoo, set the range yesterday for an initial public offering that would raise up to $3.2bn.
Snap plans to issue 145 million shares priced between $14 and $16 each on the New York Stock Exchange, while its shareholders intend to divest 45 million. The offering would value it at between about $19bn and $22bn, depending on whether it floats at the top or foot of the range.
The IPO’s 26 underwriters have a 30-day option to buy another 30 million shares, which could potentially increase the size of the offering to $3.68bn.
Snap is best known for Snapchat, its photo and video-based instant messaging app it launched in 2011, but the company has latterly moved into hardware and is attempting to reposition itself as a more multifaceted “ camera company”.
The company has raised about $2.6bn in funding altogether, though none of Tencent, Alibaba or Yahoo, which each invested in individual rounds between 2013 and May 2016, have stakes sized at 5% or more.
Venture capital firm Benchmark Capital is Snap’s largest external shareholder, with a 12.7% stake, and plans to sell almost 10.7 million shares in the offering, giving it an 8.2% share post-IPO.
Lightspeed Venture Partners will sell about 4.6 million shares, General Catalyst Partners 570,000, Technology Opportunity Partners 365,000 and SV Angel 100,000. Co-founders Evan Spiegel and Robert Murphy will each divest 16 million shares.
Snap’s other external investors will sell a total of 5.2 million shares in the offering, though the filing does not give details of individual amounts.
Perhaps significantly however, that amount makes up more than half of the class A and B shares jointly held by those investors, signifying that a lot of Snap’s VC backers may be looking for a quick return on their investments.
The reason for that could potentially be found in Snap’s financials. Snap grew its full-year revenue from $58.7m in 2015 to $405m last year as it ramped up advertising, but its net loss increased from $373m to $515m in the same period.
Nevertheless, the IPO looks certain to be the largest for a venture capital-backed technology company since Alibaba raised $25bn when it went public in autumn 2014.