Google surprised Wall Street yesterday with its announcement that it would raise an estimated $4 billion (€3.28 billion) on the eve of the first anniversary of its initial public offering.

Analysts immediately concluded that the Silicon Valley company's secondary share issue meant it was building a war chest for a sizeable acquisition, possibly overseas, or planning large capital investments.

In a Securities and Exchange Commission filing, Google said it anticipated it would use the net proceeds from the sale of 14.2 million shares for general corporate purposes, including working capital and capital expenditures.

"In addition, we may use proceeds of this offering for acquisitions of complementary businesses, technologies or other assets," it said.

John Janedis, a Banc of America analyst who is neutral on the stock, asked in a note why Google should need $4 billion when it had a strong balance sheet and significant cash generation.

"Absent Google entering into an entirely new line of business, we think the company is looking to bolster its position in Asia, where Yahoo holds an advantage," he said.

Internet rival Yahoo last week bought 40 per cent of the Chinese web property Alibaba for $1 billion. Google owns a stake in the popular Chinese search engine, Baidu.com.