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Twitter files confidentially for IPO

The logo of the social networking website Twitter is displayed on a computer screen in London on Sept 11, 2013. Twitter has filed confidentially for an initial public offering, the company said on Thursday, taking the first step toward what would be
The logo of the social networking website Twitter is displayed on a computer screen in London on Sept 11, 2013. Twitter has filed confidentially for an initial public offering, the company said on Thursday, taking the first step toward what would be Silicon Valley's most anticipated debut since Facebook Inc's last year. -- FILE PHOTO: AFP

SAN FRANCISCO/NEW YORK, Sept 12 (Reuters) - Twitter Inc has filed confidentially for an initial public offering (IPO), the company said on Thursday, taking the first step toward what would be Silicon Valley's most anticipated debut since Facebook Inc's last year.

The impending IPO of the microblogging phenomenon ignited a competition among Wall Street's biggest names for the prestige of managing its coming-out party. Goldman Sachs is an underwriter, a source familiar with the matter said on Thursday.

Twitter's IPO, though much smaller than Facebook's, could still generate tens of millions of dollars in fees from the underwriting mandate itself. Assuming the company sells around 10 per cent of its shares, or US$1 billion (S$1.27 billion), underwriters could stand to divide a fee pool of US$40 million to US$50 million, assuming an overall fee cut of 4 per cent to 5 per cent, according to Freeman & Co.

But benefits for banks that underwrite the deal would likely be far-reaching.

"Some companies will say, 'We liked the way you handled Twitter, and we want to come to you first when we do our IPO',"said Mr David Menlow, president of IPOFinancial.com.

"It's not only bragging rights," Mr Menlow said. "It's getting through the front door, which will line up banks for other transactions done after that, like debt financings and M&A."

Twitter, which has been valued by private investors at more than US$10 billion, is on track to post US$583 million in revenue in 2013, according to advertising consultancy eMarketer.

Under the 2012 Jobs Act that eased securities regulations, companies may file to go public without disclosing certain financial records. But companies that choose to file confidentially must meet certain criteria, including annual revenue of less than US$1 billion.