PhillyInc: Facebook may kick-start a sagging market for IPOs

Initial public offerings used to be seen as a rite of passage for small businesses.

Judging by last week's filing by Facebook Inc. to raise at least $5 billion, it's a big company's game now.

Facebook may be just eight years old, but it's no small business. The Menlo Park, Calif., social-network operator had $3.7 billion in 2011 revenue and 3,200 employees as of the end of December.

In addition, with $1.5 billion in cash already on hand, Facebook seems as though it's raising capital for a bank rather than a growing technology juggernaut. Its prospectus plainly states, "We do not currently have any specific uses of the net proceeds planned."

That apparent lack of plans won't dissuade many from participating in one of the most eagerly anticipated IPOs in years.

In fact, many who follow IPOs say they think that Facebook's money grab has the potential to reignite what's been a feeble market for U.S. IPOs in recent years.

An increase in the filing of registration statements with the Securities and Exchange Commission during the fourth quarter suggests more companies want to tap the public markets.

Ernst & Young L.L.P. counted 178 U.S. IPOs pending at the end of 2011, with the average time spent in registration at seven months. Technology companies accounted for 21 percent of that total followed by oil and gas companies (11 percent) and banking and capital-market firms (10 percent).

If it seems that it's been a long time since a Philadelphia-area company went public, you're right.

The most recent companies to successfully complete IPOs were Tengion Inc. (April 2010), Qlik Technologies Inc. (July 2010), and NuPathe Inc. (August 2010).

Two of those three could be considered small businesses when they joined the public-company ranks. As life-sciences companies, NuPathe and Tengion have small workforces and no sales. Radnor-based QlikTech had 574 employees and $157 million in annual revenue in 2009.

Two other companies in the Philadelphia region have pending registration statements. Epam Systems Inc., of Newtown, Bucks County, filed June 10. Trinseo S.A., of Berwyn, filed June 27.

There's nothing small about Epam, a provider of offshore information- technology services that hopes to raise more than $24 million from its IPO. The company had $221.8 million in annual revenue and 6,168 employees at the end of 2010. Most of Epam's workforce codes away in Belarus, Ukraine, Russia, and other European nations.