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.”
To read the entire article visit: Secondary offering next on Groupon's to-do list