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Renren IPO: Renren has reproduced Facebook’s social networking model in China. But it’s leading the way in launching what may be the first big social network IPO anywhere. With more than 100 million users already and China's 1.3 billion people on tap, investors will probably fill their boots — and only later worry about things like competition from Facebook itself.

Online battles tend to be winner-take-all events. Margins rise quickly with scale, making bigger doubly better. The effect is even clearer with social networks. Users gather where most of their friends are, and advertisers follow. That’s one reason Facebook has crushed rivals like Myspace and Orkut. So far, Renren has only about a sixth as many users as Facebook. And even without competition from its giant US role model, it isn't yet dominant. The likes of the smaller but growing Sina Weibo and the upscale, if fading, Kaixin001.com still hope to become China's default social network. Then there’s the possibility that Facebook will break through the Great Firewall of China, perhaps in partnership with Internet search leader Baidu.

Mark Zuckerberg, the Facebook founder, seems intent on learning Mandarin - even as he is currently blocked from operating in the Middle Kingdom.

Given the potential threats, Renren's founder, Joseph Chen, is asking investors to have faith. After tripling in 2009, revenue growth slowed to 64 per cent in 2010. Suppose the firm’s claimed 2 million new users a month and expansion efforts allow it to double revenue in each of the next two years to about $300 million. If the firm also manages to turn its 2010 loss into net margins of 30 per cent, around Facebook's level last year, that would mean about $90 million in profit. The $4 billion market value indicated for the IPO would be more than 40 times that, or almost twice the earnings multiple attached to Hong Kong-listed Internet portal Tencent Holdings.