Swedes' pension hopes tied to Facebook IPO
Published: 16 May 12 16:44 CET
Close to 3 million Swedes will be watching the upcoming stock market debut of Facebook with added interest after news emerged on Thursday that a major Swedish pension fund planned to invest in the social networking site's initial public offering.
The Seventh AP Fund AP7 (Sjunde AP-fonden – AP7) plans to be among the initial investors in the highly anticipated public offering of Facebook.
AP7's participation in the Facebook IPO means that 2.7 million Swedes will be indirect owners of stock in the popular social networking site, which boasts nearly 1 billion users worldwide.
At the same time, a survey by Swedish online brokerage firm Avanza has revealed that around 7 percent of Swedes are considering buying Facebook stock directly as individual investors.
AP7, the default pension fund for Swedes who opt out of making an active investment choice for their public pensions, plans to invest around 400 million kronor ($56 billion) in Facebook, when it gets listed on the Nasdaq stock exchange in New York later this week.
That means that each AP7 pension saver will end up having about 150 kronor of their pension savings invested in the internet company, according to the Dagens Nyheter (DN) newspaper.
Facebook hopes to raise about $15 billion by releasing more than 400 million shares in the company with a price range of $34-$38 per share, according to the Reuters news agency.
Some analysts have projected that Facebook's IPO could end up valuing the company at more than $100 billion, but many remain skeptical about the valuation of the company, which needs to see a drastic rise in advertising revenue in order to live up the high expectations surrounding the public offering.
One of the skeptics is Avanza economist Claes Hemberg, who is concerned that interest in Facebook stock is so high among Swedes.
"There are a lot of young people who risk making their first and worst deal of all time," he told the TT news agency.
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