The wealth management industry should brace itself for a new
“liquidity event” – the arrival of “Facebooker” millionaires, as many as 970 of them, new research shows.

Of the 970 current or past staff slated to become at least
millionaires from the Facebook IPO due tomorrow, 165 of them are or will become ultra high net worth
millionaires, most obviously its founders Mark Zuckerberg, Eduardo Saverin, Chris
Hughes, Andrew McCollum and Dustin Moskovitz. All of these men are UHNW
individuals or close to being so, according to a report by WealthInsight, published before Facebook confirmed its pricing last night.

The network said it will
sell a total of 337.4 million shares for a higher-than-expected $38 per
share, raising
up to $18.4 billion an valuing the company at $104 billion. This makes it the second largest US IPO of all time
behind Visa's 2008 offering of $19.65 billion, according to Dealogic, and blows analysts' initial estimates of $28 to $35 out of the water.

At a time of market volatility and worries about the eurozone, the
influx of hundreds of such people into the ranks of the wealthy comes as
a welcome development, although much depends on how realistic are the
valuations of the IPO.

“Post-IPO, many current employees will no doubt be tempted
to follow their former colleagues out of the door. Many of these people will no
doubt start new ventures or invest in existing ones,” the report said. “With
regard to their finances, on the one hand Facebookers are keenly interested in
intelligent and exciting investment opportunities. On the other, young as they
are, wealth preservation is a major concern. Thus an approach that wraps these
two preferences in a fully tailored approach is likely to be well received,” it
said.

I don't want to be American any more

The creation of a new class of millionaires has already
caused a political stir. Saverin has moved to renounce his US citizenship and thereby free himself from the
clutches of the US
worldwide system of tax, an issue that has become controversial due to recent
tax compliance legislation such as the FATCA Act.

Inevitably, memories of the dotcom bubble and some of the
inflated valuations seen at the time have created some skepticism about the Facebook
valuations.

Values

By many accounts, Facebook’s IPO is overpriced. Its share price values the company at a multiple of over 99 times company earnings. This is well above the current multiples (as of
May 2012) for other tech companies such as Apple (13.7x) and Google
(18.6x)  although it is still well below
Linkedin (695x).

But setting aside any queries about the sustainability of
such prices, the report said that an IPO price of $30 per share, there will
be 165 UHNW individuals, 295 mid-tier millionaires (those with at least $5
million but less than $30 million) and 500 HNW individuals. Of course, now that the share price has beat expectations they will all have a bit more.

“To put the scale of Facebook’s IPO as a liquidity event
into perspective, Facebook’s 165 UHNW individuals will increase California’s UHNW
individual population (which now stands at 7,170) by 2.3 per cent,” the report
added.