DealBook: LinkedIn and Freescale Join Surge of I.P.O.’s

David Paul Morris/Bloomberg News Jeff Weiner, chief executive of LinkedIn. The company expects its public offering to raise up to $274 million.

As investor appetite for initial public offerings grows, dozens of technology companies from start-ups to stalwarts are prepping for their stock market debuts.

On Monday, LinkedIn, the social network for professionals, said it was on track to raise as much as $274.4 million in an I.P.O., according to a filing on Monday. Freescale Semiconductor Holdings, the chip maker acquired in 2006 in one of the largest technology buyouts ever, disclosed the same day that it could raise $944 million in its offering

“If LinkedIn’s I.P.O. does well, it will likely drive others to come to market,” said Kerry Rice, a Wedbush Securities analyst. “You could see a pretty strong second half of this year for the technology I.P.O. market.”

While investor demand for such offerings has been strong, the performance of new technology shares has been mixed. So far this year, the average I.P.O. in the industry has closed 24.6 percent higher than the initial share price on its first day of trading, according to data from the brokerage firm Morgan Keegan.

But many stocks are giving up those gains. The group’s total average return is 17.6 percent.

On its first day of trading, shares of Renren, often described as the Facebook of China, jumped 29 percent to $18. Netqin, another technology company based in China, priced at the top end of its forecast last week, but has fallen roughly 28 percent since its debut.

Hoping to build on the fervor of social networking sites like Facebook, LinkedIn, which has more than 100 million members in over 200 countries, said it expected to sell 7.8 million shares at $32 to $35 a share.

At the top end of the range, the company is valued at more than $3 billion. LinkedIn, one of the first major social networks to go public this year, said it planned to use the proceeds of the sale for working capital, product development and possible acquisitions.

Both the company’s chairman, Reid Hoffman, and its chief executive, Jeff Weiner, are selling a small number of shares, about 0.1 percent each. The company’s top venture capital investors — Sequoia Capital, Greylock Partners and Bessemer Venture Partners — are not offering any shares in the I.P.O. and will collectively own 37.5 percent of LinkedIn after the offering.

According to the filing, Goldman Sachs, which owns 871,840 shares (less than 1 percent of the company), is selling its entire investment, making it the largest individual seller.

In an amended prospectus with the Securities and Exchange Commission, Freescale set the price range for its offering at $22 to $24 a share.

The company, which plans to use the proceeds to reduce debt, said it would sell 43.5 million shares. At the midpoint price, Freescale could raise $944 million, after taking expenses into account. The underwriters have the option to sell an additional 6.525 million shares if there is enough demand.

Freescale is among a recent flurry of private equity-backed companies looking to go public, as buyout firms rush to make an exit from deals made at the peak of the boom. The hospital operator HCA raised $3.78 billion in its debut this year, a record private equity-backed I.P.O. that topped other recent ones, including those of Kinder Morgan and Nielsen Holdings.

A group of firms, including the Blackstone Group, TPG Capital, the Carlyle Group and Permira Advisers, acquired Freescale in 2006 for $17.6 billion , a deal that was called “one of the ugliest buyouts in history.” In the first years after the takeover, Freescale struggled under the weight of its debt.

But the fortunes of the company, which makes chips for cars, cellphones and other products, have improved somewhat with the economy. Freescale reported that last year, revenue rose to $4.46 billion from $3.5 billion in 2009. Its debt load, though, is still cutting into earnings, and the company reported a net loss of $1 billion in 2010. It turned a $748 million profit in 2009.

With the proceeds from the offering and cash on hand, Freescale plans to pay off about $1.1 billion in debt. The company will also make payments to its private equity owners, as part of their management deals. Blackstone is to receive $33.6 million, Carlyle $10.8 million, TPG $9.6 million and Permira $6.5 million.

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