Groupon Inc is poised to price its initial public offering $1 to $2 above its current range, responding to stronger-than-anticipated demand for the biggest U.S. IPO in months, three buyside sources said on Wednesday.

The daily deals website's chief executive, Andrew Mason, and his executive team have spent the past week-and-a-half on the road, pitching to investors and addressing criticism about an easily replicable business model, slowing growth and other concerns.

Over the course of the roadshow, the IPO -- one of the most closely watched market debuts in years -- has drawn more interest because of a tiny 4.7 percent float and due to Groupon's being the first daily-deals website to go public.

The company is now targeting a price $1 to $2 above the current $16 to $18 per share range, according to three investors who said they spoke with lead underwriters. At $19, the IPO would value Groupon at $12.02 billion. At $20, it would value the company at $12.7 billion.

It is many multiple times subscribed, said Scott Sweet of research firm IPO Boutique. There is a strong likelihood that Groupon will price above the prevailing $16 to $18 range.

Groupon sells discount coupons for local businesses and takes a cut of the proceeds for brokering the deals. While the market for such companies is booming and growing into a multibillion dollar industry, Groupon has struggled. The company, which has never turned a net profit, has changed its accounting twice under pressure from regulators and lost two chief operating officers this year.

It had scaled back its IPO to raise up to $540 million, from a previous target of up to $750 million, amid concerns about the advent of high-powered rivals from Google Inc to Amazon.com Inc.

Those companies have billions of dollars to put in play, while Groupon is expected to have about $723 million in cash and equivalents after the IPO.

Books closed on Wednesday afternoon. The IPO, one of the smallest floats in the past decade, is scheduled to price late on Thursday and the 30 million shares are due to begin trading Friday on Nasdaq under the ticker GRPN.

No further information was immediately available. A spokesman for Groupon declined to comment. The lead underwriters, Morgan Stanley, Goldman Sachs and Credit Suisse, declined to comment.

Groupon's IPO may pave the way for other, smaller daily deals operators. If it does well, it would also bode well for other Internet companies also considering tapping markets, including social gaming company Zynga and social network Facebook.

Despite robust initial demand, however, the risk is that Groupon may be flipped by some investors on the first day. Later on, early-stage investors might want to cash out through secondary issues, putting downward pressure on the stock.

One of the three investors said he had placed an order for 150,000 Groupon shares, but expected to get a much smaller allocation. A second investor told Reuters he wasn't planning to invest in the IPO.

The third investor said he was unhappy with the price increase and a move by some underwriters to close their books earlier on Wednesday.

(Additional reporting by Anthony Hughes in New York; Editing by Tiffany Wu, Edwin Chan, Andre Grenon, Richard Chang and Carol Bishopric)

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