(Adds sourcing, company background)
By Sruthi Ramakrishnan and Lauren Hirsch
Oct 12 U.S. photo-sharing app Snapchat has
chosen Morgan Stanley and Goldman Sachs Group Inc
as lead underwriters for an initial public offering that could
come as early as March, a source familiar with the situation
said on Wednesday.
The banks were notified earlier this week that they had been
awarded one of most coveted and potentially lucrative IPO
mandates in recent years, as the Venice, California-based
company vies for a $25 billion valuation in the stock market.
JPMorgan Chase & Co, Deutsche Bank AG,
Allen & Co, Barclays Plc and Credit Suisse Group AG
will be joint book runners, the source said, asking not
to be named because the information was not yet public.
Snapchat, whose parent is Snap Inc, and the banks were not
immediately available to comment on the news first reported by
Snapchat started in 2012 as a free mobile app that allows
users to send photos that vanish within seconds. It has more
than 100 million active users, about 60 percent of whom are aged
13 to 24, making it an attractive way for advertisers to reach
Awash in venture funding, the company raised $1.81 billion
in May, which valued it at about $20 billion, media reports said
at the time.
But investors worry that Snapchat's advertising sales, which
began last October, is the company's only significant revenue
Snap in September starting describing itself as a camera
company. Its first physical product will be glasses with an
embedded video camera. Users will be able to record video from
their perspective in 10-second increments, which can be synched
with their smartphones.
The company's last round of funding included General
Atlantic, Sequoia Capital, T. Rowe Price and Lone Pine. Previous
rounds included Fidelity Investment, Kleiner Perkins Caufield &
Byers and Yahoo! Inc.
The U.S. IPO market has been unfriendly to technology
companies for most of 2016. Year to date, technology IPOs have
raised roughly $2.3 billion, compared to $5.2 billion over the
same period in 2015. But a recent string of such IPOs has
instilled more confidence among investors.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Lauren Hirsch
in New York; Editing by Shounak Dasgupta and Richard Chang)