Facebook, the world's largest social-networking service, chose Morgan Stanley to take the lead on its planned initial public offering, four people with knowledge of the matter said.
Morgan Stanley gains the coveted lead-left position on the IPO filing, said the people, who asked not to be identified because the matter is private. That designation usually means a larger share of the fees collected by a securities firm. Facebook will file plans with regulators tomorrow to raise $5 billion, though the amount may rise, two people said. Goldman Sachs, JPMorgan Chase,, Barclays, and Bank of America will help manage the sale, people said.
Getting picked to handle the IPO is a coup for Morgan Stanley, which according to data compiled by Bloomberg last year won the biggest share of business underwriting U.S. initial offers by internet companies. Taking the lead on Facebook may catapult the New York-based bank to the top of the U.S. IPO league table for the third year running.
"Morgan Stanley was able to leverage its dominance among internet companies going public," said Anupam Palit, head of research at GreenCrest Capital Management LLC. "It shows Morgan Stanley's track record of underwriting internet IPOs has paid off."
Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment, as did representatives of Morgan Stanley, Goldman Sachs, JP Morgan, Bank of America and Barclays Capital.
Facebook had been discussing raising as much as $10 billion, a person with knowledge of the matter said late last year. At that valuation, Facebook's IPO would be the biggest ever by an internet or technology company, data compiled by Bloomberg show, trumping the combined U.S. and German debut from Infineon Technologies AG totaling about $5.85 billion in 2000.
Silicon Valley relationships may have paid off for Morgan Stanley after it took the lead on last year's biggest internet IPOs, from companies such as Zynga and Groupon.
On underwriting league tables, Morgan Stanley took 20% market share for IPOs by internet companies on U.S. exchanges in 2011, according to data compiled by Bloomberg. New York-based Morgan Stanley also led all U.S. IPOs last year with 13% share, selling an estimated $4.6 billion of shares and generating an estimated $262 million in fees, the data show.
Morgan Stanley usually allocates a portion of initial offerings for clients of its retail brokerage, Morgan Stanley Smith Barney, a joint venture between the firm and Citigroup Inc. Morgan Stanley CEO James Gorman has said that new equity issuances provide investment banking revenue to the brokerage and drive higher trading activity.
Morgan Stanley also worked on IPOs by Yandex NV, Zynga and LinkedIn, among the biggest internet debuts in the U.S. last year. It was one of the lead managers on Google's IPO in 2004 and led Apple Inc.'s IPO in 1980, Bloomberg data show. Goldman Sachs, which placed fourth in U.S. internet IPOs in 2011 behind Deutsche Bank and Bank of America, helped take Yandex, Zynga and Groupon public, while losing out on LinkedIn, the data show.
Morgan Stanley's assignment was previously reported by IFR.
-- Bloomberg News --