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Secondary offering next on Groupon's to-do list

by John Pletz
Publication: Crain’s Chicago Business

November 7, 2011

Now that Groupon Inc. has pulled its closely watched IPO across the finish line, it's time to start working on another stock offering.

Groupon's IPO Friday at $20 a share defied doubters who questioned its business model, but it made only 6% of its shares available for public trading. That's not enough to allow big mutual funds to buy in or the venture-capital firms that backed the Chicago-based daily-deal phenom to cash out. Both need more liquidity to trade shares freely without triggering big price swings. That requires a secondary offering that will put more shares on the open market within the next six months or so.

“Going public is a two-step process,” says Tim Loughran, a finance professor who studies IPOs at the University of Notre Dame. “First is the IPO. Then they'll need to do a secondary offering relatively quickly to let the venture capitalists exit and let the institutional investors get a bigger role.”

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