Wall Street Pushes for Groupon IPO

This past week Groupon announced that it had completed its enormous $950 million round of financing to fuel its global expansion, invest in technology and to provide liquidity for employees and early investors. Many of those providing financing were the A-list of the Silicon Valley venture capital community.

Now according to a story that first broke on CNBC, the Chicago based daily deals vender is looking toward an IPO worth $15 billion possibly as soon as this spring, with CEO Andrew Mason said to be in meetings to discuss the offering with bankers on Friday, including Morgan Stanley.

Groupon’s new funding comes at a time when privately owned companies such as Facebook are gaining access to huge amounts of capital, allowing them to at least delay the intense scrutiny that comes with offering shares on the public market.

Some analysts projected that while the market is eager for IPOs from companies like Groupon, Facebook, Twitter, Zynga and LinkedIn, it might only be wishful thinking where some of these companies are concerned and, as is the case with Groupon, they can raise enough capital to cash out early investors and still avoid IPO. So why would the company that just raised nearly $1 billion be looking at an IPO so soon?

It is thought that bankers are shoving Groupon toward an IPO now while the company is still number one in the daily deals industry. Plus the reports that Goldman Sachs could be taking the social network public next year have investment banks that didn’t get in on the Facebook deal frantically looking to latch on to the next big technology superstar with IPO potential. And Groupon looks to be it.

So what is it that makes the coupon king such a hot target right now? For one thing its phenomenal growth. In just over two years, the social buying site has evolved from a fledgling start-up to one of the fastest growing companies on the internet, with over 50 million users around the globe and annual revenues of over $1 billion. It’s also leaps and bounds ahead of any of its competitors and has the data necessary for advertisers to create deals that will attract their target markets.

Considering Morgan Stanley’s recent investment in Groupon, it’s likely that the bank will be the one to take the company public, a major coup, particularly now with the Facebook/Goldman Sachs deal dominating the news. Greg Sterling, analyst and founder of Sterling Market Intelligence, a research firm, told DealBook, “It’s smart to strike while the iron is hot, and they’re the most visible and fastest-growing player in their market. To wait a year would inject a level of uncertainty for the proposition of going public.”

While most of Groupon’s competitors are lagging a safe distance behind, that may not always be the case. This is especially true of LivingSocial, who all but threw down the gauntlet to Groupon when they stated that they would use their $183 million investment from Amazon and Lightspeed Venture Partners in a concerted effort to overtake Groupon and claim the number one spot. They’ve got a long way to go but a lot can happen in a year.