New details on Groupon’s unlikely IPO partner.
Private stock exchange SecondMarket is selling shares in the upcoming Groupon IPO to its clients, according to Reuters.
The story says that a SecondMarket executive recently emailed “potential investors… who previously traded through the firm to see if they were interested in buying Groupon shares… SecondMarket will be working with Morgan Stanley, one of the top underwriters on the Groupon IPO, as a member of the selling group for the offering.”
SecondMarket isn’t commenting on the Reuters report, but here is what I’ve learned:
For the past year, I’ve wondered what will happen if a hot tech company goes public at a price below where it had traded on the private secondary markets. After all, those secondary trades are theoretically transacted at 15%+ discounts to public offering valuations, just as IPOs are theoretically priced below where shares will close on their first day of trading. Everyone knows that the latter doesn’t always play out, but so far the former has held court.
To me, SecondMarket’s Groupon strategy could be a brilliant hedge. Sure it might upset clients who bought higher than Groupon’s IPO price, but it could attract a larger universe of folks who either stayed away from Groupon because they felt the private price was too high, or who generally like the idea of being able to buy in at an IPO price. And, if this proves successful, I wouldn’t be surprised to see a repeat performance. Perhaps with Facebook…
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