Morgan Stanley appears to have pulled off quite a coup.
Coming from way behind, it is on the verge of being named the lead underwriter for the Facebook IPO, if the WSJ is to be believed. Most people assumed that Goldman Sachs was in the driver’s seat but in the end, the botched effort to raise $1.5 billion from domestic clients of Goldman Sachs may have been a decisive factor. Or perhaps they just weren’t willing to compete on price. We may never know.
In any case, this is an even sweeter victory for Morgan Stanley than its victory in the Google IPO sweepstakes. Recall that way back then Google was aiming to change the IPO process, insisting on a Dutch auction that would be more fair to all investors. On top of that, they were able to extract some fee concessions. People ended up wondering if the Google IPO win were merely Pyrrhic, as the auction was difficult to pull out. Not so this time around.
Facebook has no intention of holding a Dutch auction, though we’d all be interested in learning the fee terms. My guess is that they are excruciatingly low. And for Goldman Sachs, this is not a complete loss. It invested $450 million in the company, and will fare well once the stock starts trading. It has generated fees for other work and it will not be shut out completely.
There will be other underwriters, and we would expect Goldman Sachs to be on the list. To be sure, this may not be a done deal, but the decisions would appear to be imminent, as the company is said to be considering filing registration papers as early as next week.
For more:
- here’s an article from Deal Journal
Related articles:
Goldman Sachs at a critical turning point
Race to lead Facebook IPO
