Renren Inc., which operates the leading social networking online platform in China with 117 million users, filed and announced terms for its much-anticipated IPO on Friday. The Beijing-based company plans to raise $531 million by offering 53.1 million ADSs (19% insider) at a price range of $9 to $11. The company also plans to raise $110 million in a concurrent private placement with Alibaba (a leading Chinese B2B e-commerce company), China Media Capital and CITIC Securities. At the mid-point of the proposed range, Renren will command a fully diluted market value in excess of $4 billion. Each ADS represents three ordinary shares.
The high-profile company, which was founded in 2002, was the first major social networking site to offer services such as its Renren Open Platform program, which allows users to access third-party applications, and its Renren Connect program, which allows users to share content from over 600 partner websites. Renren generates revenue from online advertising as well as Internet value-added services, which are mostly comprised of online games. It booked $77 million in revenue last year and has grown its top line at a 136% CAGR from 2008. Operating income turned positive in 2010 to $8 million.
Principal backers include SOFTBANK (34.2% post-offering stake), DCM (7.4%) and General Atlantic (3.4%). Joseph Chen, the company's founder, Chairman and CEO, will retain 22.8% share ownership and nearly 56% voting control owing to his ownership of class B shares. Renren plans to list on the NYSE under the symbol RENN. Morgan Stanley, Deutsche Bank Securities and Credit Suisse are the lead underwriters on the deal, for which timing was not disclosed.
Renren's IPO submission follows LinkedIn's lead, which filed for an IPO this past January. LinkedIn, the leading professional social networking website with more than 90 million members worldwide, filed to raise up to $175 million in its IPO offering, giving it a potential valuation over $2 billion.
