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Rating:Will the Groupon IPO Delay Bite Mutual Funds? Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, October 12, 2011

Will the Groupon IPO Delay Bite Mutual Funds?

News summary by MFWire's editors

Fundsters interested in initial public offering (IPO) investing may want to take a look at today's Wall Street Journal. Randall Smith reveals four mutual fund companies -- Capital Group [see profile], Fidelity [see profile], Morgan Stanley Investment Management [see profile] (presumably the institutional arm that stayed with the investment bank) and T. Rowe Price [see profile] -- whose offerings collectively invested $450 million in Groupon in December and ponders what the Chicago-based deal site's IPO delay will mean for the funds.

"Expectations that the funds might triple their money or more have come back to earth," Smith writes, noting that, while valuations of Groupon ranged from $15 billion to $30 billion (up from the $4.7-billion the four fund firms invested at last year), Capital Group estimated as far back as May 31 that Groupon was worth $9.5 billion and T. Rowe put it at $8.7 billion.

Spokespeople for Groupon and the fund firms declined to comment to the WSJ. Yet fundsters reminded the paper that funds rarely invest more than one percent of their assets in a single pre-IPO stock. So even if the recent market woes mean the fund firms actually record a loss on Groupon when it finally IPOs, fund shareholders should barely feel it.

Lisa Carnoy, co-head of global capital markets at Bank of America Merrill Lynch, and Barry Barbash, partner at Willkie Farr & Gallagher, both weighed in for the article. 

Edited by: Neil Anderson, Managing Editor


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