The company founded by Mark Zuckerberg in a Harvard dorm room in 2004 picked Morgan Stanley to take the coveted "lead left" role in what is expected to be the largest IPO ever to emerge from Silicon Valley.

The $5 billion is a preliminary target and could be ramped up in coming months in response to investor demand, IFR added.

The other four bookrunners chosen were Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan, although the underwriting syndicate could be expanded later, IFR cited the sources as saying.

Facebook declined to comment on the report by IFR, a unit of Thomson Reuters. "Lead left" refers to where the top underwriter's name will appear on the IPO prospectus.

The preliminary IPO filing sets the stage for a May market of the world's largest social network, IFR reported, a coming-out party that will dwarf almost any before that, including Google Inc's $2 billion IPO.

IPO VETERAN CLINCHES DEAL

Morgan Stanley's experience in arranging major Internet IPOs - including those of Groupon and Zynga - helped it clinch a pivotal role after an unusually secretive selection process, IFR reported.

Final pricing would not be set for several months, during which the size of the IPO could be increased should investor demand warrant it, IFR added.

The prospective IPO - expected to be one of the largest U.S. market debuts in history - has whipped up a frenzy of investor and media speculation this month, buoying shares in social media peers from RenRen to LinkedIn and igniting fierce competition on Wall Street.

The IPO - a prized trophy for any investment bank - likely set a new standard for how low its arrangers are willing to go on advisory fees to win big business, analysts say.

Silicon Valley start-ups from Zynga and LinkedIn to Groupon and Pandora Media Inc have since last year begun testing investor appetite for a new wave of dotcoms, with mixed results.

Investors last year had warned of a second dotcom bubble inflating, after LinkedIn doubled on its debut; but the so-called over-enthusiasm has waned in recent months.

The last dotcom player to debut, Zynga, closed 5 percent below its IPO price during its first trading day in December.

(Writing by Edwin Chan)

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