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Groupon scales back IPO, now looking to raise $540 million

grouponDaily deals site Groupon is hoping to raise somewhere in the region of $500 million in its upcoming IPO. Back in June it was talking of raising $750 million. The latest, more modest figure has been put down to a number of factors, including volatile market conditions and the departure of two chief operating officers this year.

According to a regulatory filing on Friday, Groupon plans to sell 30 million shares – equal to less than 5 percent of the company – for $16 to $18 each. If it shifted all of them at the top price, the IPO would raise $540 million. At the least it would raise $480 million.

This would value the company at between $10.1 billion and $11.4 billion, which, as Reuters points out, is significantly lower than an earlier valuation of $20 billion, but still more than the $6 billion Google put up for it in December last year. Groupon declined Google’s offer.

The scaled back valuation may still prove unattractive to investors when the sale of shares goes ahead next month, with many seeing the relatively young daily deals business as a highly competitive and unpredictable area. The daily deals market has expanded rapidly since Groupon started three years ago. A ton of competitors have appeared, including big-hitters like Amazon and Google, pushing the business to saturation point.

Speaking to Reuters, Josef Schuster, founder of Chicago-based IPO research and investment house IPOX Schuster, said: “This offer strikes me as very, very unattractive. I think it’s over-valued.”

However, third-quarter results published Friday showed that the Chicago-based company had increased revenue by 10 percent on the previous quarter and reduced operating losses.

Groupon will launch its IPO roadshow next week in an attempt to attract investors, with chief executive Andrew Mason, chief financial officer Jason Child and product head Jeff Holden at the helm.