The Emperor’s new IPO

Four years ago, in mid-May 2012, Mark Zuckerberg and colleagues IPO’d Facebook.   Rather unusually the IPO didn’t have a clear use of proceeds:

The company says it plans to use the proceeds for working capital and general corporate purposes, but adds: “We do not have any specific uses of the net proceeds planned.”  WSJ

Imagine my version, he instead says that  “we will be using the proceeds to create a fund so that we and our current stakeholders can build a future for ourselves that does not rely on social media or advertising…”   

His advisors and bankers would have gone into meltdown…  Predicting the demise of your core industry and planning for an alternative future doesn’t sound like the stuff that pre-IPO prospectuses are made of.

But from a certain distance this looks rather like what Saudi Aramco is doing.  Bankers are, of course, killing each other to get a piece of the action – it will undoubtedly generate massive fees (for the bankers).  But what of the use of proceeds?

“What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”

As long  ago as 2000 Sheik Yamani famously said:

The Stone Age came to an end not for a lack of stones and the oil age will end, but not for a lack of oil. –  Ahmed Zaki Yamani

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