Due to be held tomorrow, Facebook's massive IPO will create a new cohort of millionaires and multi-millionaires - rich pickings for the wealth management industry, says a new report.

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.

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.

According to the report, the company is expected tomorrow to
sell a total of 337.4 million shares for between $28 and $35 per share, raising
up to $12 billion. (Some media reports have suggested an even more ambitious
fund-raising target of up to $16 billion.)

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
expected share price will value the company at a multiple of between 79 times
and 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 on an IPO price of $30 per sahre, 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.

“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.