Groupon float goes ahead, but on smaller scale

The internet phenomenon, set up in 2008, yesterday unveiled plans to sell 30 million shares, or less than 5 per cent of the company, for between $480 million and $540m (£302m-£339m).

The midpoint would value Groupon $10.8 billion, far less than the $20bn initially expected but still above the $6bn that Google offered last year. Groupon had previously hoped to raise up to $750m.

But despite the lowered valuation, some analysts say Groupon’s shares could still struggle when they come to market next month. They point to questions over the long-term viability of a company that faces fierce competition in a business that has low barriers to entry.

Also, the fact that Groupon has changed its accounting twice under pressure from regulators, and lost two chief operating officers this year, has not instilled confidence.

Groupon is one of the most closely-watched IPOs this year, as turmoil in the financial markets disrupted many share offering plans and cut the value of the few that did get done. If it succeeds, companies such as Facebook and social gaming company Zynga may follow.