5 December 2011 - 4:47am | posted by | 0 comments

Finance giants lose big bucks on Zynga IPO gamble

FarmVille: popular Facebook game FarmVille: popular Facebook game

Some big names in the world of finance will be starting the week with a sore head as Zynga's IPO looks set to value the company at around $9 billion.

A number of Wall Street titans are are facing paper losses of 29% or more on investments they made in the developer of Facebook games such as FarmVille and CityVille earlier this year, according to the Wall Street Journal.

At mid-year,  the IPO was expected to reflect a $20 billion valuation. In August, Zynga itself obtained an outside valuation of $14 billion, says the WSJ, quoting disclosure materials.

These materials filed in connection with the IPO planned later this month reveal that mutual funds run by Morgan Stanley invested  $75 million in Zynga preferred shares in February at a price of about $14 per share.

That's around $4 more per share than the figure of $8.50 to $10 a share that Zynga said on Friday it might price its IPO at .

Other mutual funds that invested in the same early Zynga financing, says the WSJ, include Fidelity Investments, which invested $82 million, and T. Rowe Price, which invested $72 million.

Representatives for the funds declined to comment to the WSJ.

LinkedIn shares are 38% below their peak after their IPO. Groupon, which went public last month, has been trading 28% below its offering price.

But Morgan Stanley, Fidelity and T. Rowe Price, who made pre-IPO investments in that company,are still showing a gain of more than 100%.

Zynga's IPO is expected to be priced, on Dec. 15 and the shares are expected to begin trading next day. 

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