GOOGLE is to put its keenly awaited multibillion-dollar flotation on the back burner, dashing hopes of a springtime fee bonanza on Wall Street, The Times has learnt.
The internet search engine company has never confirmed that it will float on New York’s Nasdaq market. However, speculation has been rife for months that
the group will launch an initial public offering (IPO) in the spring, valuing the internet giant at up to $20 billion.
The Times has learnt that Google’s management, headed by Eric Schmidt, the chairman and chief executive, has grown wary about the timing of a float because market conditions are not right.
Dr Schmidt attended a series of closed-door meetings in London this week, at which he was repeatedly asked about the company’s intentions to float. He told business leaders gathered at the private meetings that Google had no urgent need to tap the stock market for capital because the company’s cash position was extremely strong. However, in a surprise move, the Google chief added: “An IPO is not on my agenda right now.”
The statement jars with persistent market speculation, which appeared to set the scene for a flotation of the business in the spring or early summer of this year.
When questioned about the statement, Dr Schmidt declined to comment. However, a source close to Google confirmed that the statement reflected the chief
executive’s views. The source added that investment banks, jockeying to be appointed as lead underwriters and advisers to an IPO, have told Google to delay a flotation because the high-tech market is expected to continue its recent rise.
Dr Schmidt’s comments mark a huge departure from current views about Google and its plans to raise money in the public markets. Just days ago, the New York market was buzzing with reports that the company had completed an internal audit and was set to seek regulatory approval for a full public offering of shares.
Analysts estimate that Google is worth between $15 billion and $20 billion, and believe that an IPO would see about a quarter, or a third, of the company offered to the public.
A deal would generate much-needed investment banking fees on Wall Street, which continues to suffer a drought of high-rolling IPOs.
“This would have been a significant IPO this year,” Justin Cable, of B Riley Equity Research, in Los Angeles, said. “If it does not go ahead, then the investment banks would feel it. But the company would still be in good shape. It generates a lot of cash. It is right to say it does not need to float.”
Google as a private concern, owned largely by the venture capital firms Sequoia Capital and Kleiner Perkins Caufield & Byers does not release financial information. Analysts estimate, however, that Google’s annual revenue is between $500 million and $1 billion, with profits between $150 million and $300 million.