Facebook hopes to raise $16bn in public flotation

Facebook is set to go public in the largest initial public offering for a technology firm yet.

Late on Friday morning, the company's public shares will start trading on the Nasdaq at an initial price of $38 (£24), using the ticker symbol 'FB'. With 421,233,615 shares going on sale, Facebook is hoping to raise just over $16bn in the IPO. The share price reflects a valuation of the company at $104bn.

Google's $1.67bn IPO in 2004 has until now held the record for tech firms.

Facebook set the $38 price on Thursday, just ahead of the flotation. The price was at the higher end of the range it predicted when, on Tuesday, it upped the number of shares it was offering by 25 percent — previously, it was hoping to raise $13.6bn.

As with Google's Larry Page, Sergey Brin and Eric Schmidt, Facebook's Mark Zuckerberg will use the split between Class A common stock (the shares going on sale) and Class B common stock to retain effective control of his company despite the IPO.

Class B common stock accounts for just under 96 percent of Facebook's voting rights. Even though he is selling off 30.2 million shares for the flotation, Zuckerberg's Class B share holdings will see him hang onto more than 55 percent of the voting power.

180 million of the 421.2 million shares going on offer will come from Facebook itself. The remainder are being sold by previous investors, which range from Microsoft (selling 6.56 million shares) and investment banks such as Goldman Sachs (28.67 million shares) to venture capital firms such as Greylock Partners (7.61 million shares) and Bono's Elevation Partners (4.62 million shares).

LinkedIn co-founder Reid Hoffman will be offloading 942,000 shares, which will theoretically net him more than $35m. All these investors will be retaining many more shares than they are selling.

Those hanging onto all their existing shares entirely include Andreessen Horowitz, Sean Parker and Dustin Moskovitz.

Although financial experts seem upbeat about Facebook's IPO, the $38 price did not reflect two pieces of potentially bad news that came through for the company this week.

The Wall Street Journal reported on Wednesday that General Motors had stopped advertising on the social network, as it was not seeing sufficient returns. Although this is just one deal, GM is a large company and ad revenue is the basis of Facebook's business model.

Then on Thursday, Google unveiled its Knowledge Graph, a major revamp to its search product. Although the two companies take differing approaches, both are competing to be the default point of entry for web users, and the Knowledge Graph could give Google a new edge in this contest.

Regulatory concerns over privacy issues remain a constant threat to Facebook. It also remains to be seen whether Facebook's recent $1bn purchase of the Instagram photo-sharing app, widely seen as a defensive play against a potential rival, was worthwhile.