Facebook IPO Will Earn Underwriters Some Big CashBy: Shawn Hess - May 18, 2012
Yes it’s finally here. In less than one half hour Facebook will begin trading on the Nasdaq stock exchange in what is probably one of the most well publicized IPOs in history. Despite early warnings that Facebook is already overvalued and that big advertising isn’t performing as well as hoped on the social networking platform, investors are hungry for Facebook shares and the buzz surrounding their IPO is huge.
While Facebook is going to raise about $16 billion with their offering, those who have elected to underwrite the deal also stand to make a big profit. So who’s leading this barrage
of investment bankers? Morgan Stanley, JPMorgan Chase & Co., and Goldman Sachs Group Inc. are at the forefront of over 30 banks handling the sale.
According to Bloomberg, Facebook will payout of 1.1% fee to the lead underwriters on this IPO and the choice to choose these firms was more or less a no-brainer. Facebook Chief Operating Officer Sheryl Sandberg has some experience with IPOs and she already had a relationship with several of the investment firms before the IPO even got rolling.
Sandberg worked with Morgan Stanley’s co-head of technology investment banking, Michael Grimes on Google’s IPO and she leveraged that relationship working on this new IPO. This deal will not only bring the underwriters a lot of recognition for future deals, but also earn them about $176 million in fees.
If you’re trying to get a piece of Facebook, get ready, trading is about to begin. Check back here throughout the day for updates on the IPO. If you’re buying, Good luck!