Facebook Will Reportedly Pay 1.1% To IPO Bankers

Facebook will pay underwriters just 1.1 percent of the $5 billion initial public offer, amounting to $55 million in fees to be split by 31 banks.

Facebook will pay underwriters just 1.1 percent of the $5 billion initial public offer, according to a Bloomberg report citing two anonymous sources.
Bloomberg said the 31 investment banks underwriting the IPO would “share” this fee, which amounts to about one-fifth of the percentage that underwriters usually get, since the average last year was about 5.48 percent.
The lead underwriter, Morgan Stanley, would probably get a bigger proportion of the fee than the other banks, which is typical.
However, while the percentage is lower than the typical IPO, the deal size is a lot larger, keeping the overall size of the take rather hefty: $55 million in fees will be split by 31 banks.
While the deal is large, it’s not the largest ever, as Business Insider noted that General Motors raised five times as much, $20 billion, in a 2010 IPO.
Facebook’s impending IPO may give the participating underwriters a sense of prestige that could possibly help the institutions win additional business in the future.
Regardless, the fact that Facebook negotiated fees so low exhibits the kind of frugality that has made the company so attractive to investors in the first place.
While Facebook hasn’t officially scheduled a date for the IPO, Business Insider said the deal would occur in May.
In addition to the $5 billion IPO, and supporting it are a $5 billion line of credit and a $3 billion bridge loan.
Here’s the full list of the 31 investment banks that will divide up the $55 million in fees from the IPO:

  1. Morgan Stanley & Co. LLC
  2. J.P. Morgan Securities LLC
  3. Goldman, Sachs & Co.
  4. Merrill Lynch, Pierce, Fenner & Smith Incorporated
  5. Barclays Capital Inc.
  6. Allen & Company LLC
  7. Citigroup Global Markets Inc.
  8. Credit Suisse Securities (USA) LLC
  9. Deutsche Bank Securities Inc.
  10. RBC Capital Markets, LLC
  11. Wells Fargo Securities, LLC
  12. Blaylock Robert Van LLC
  13. BMO Capital Markets Corp.
  14. C.L. King & Associates, Inc.
  15. Cabrera Capital Markets, LLC
  16. CastleOak Securities, L.P.
  17. Cowen and Company, LLC.
  18. Lazard Capital Markets LLC
  19. Lebenthal & Co., LLC
  20. Loop Capital Markets LLC
  21. M.R. Beal & Company
  22. Macquarie Capital (USA) Inc.
  23. Muriel Siebert & Co., Inc.
  24. Oppenheimer & Co. Inc.
  25. Pacific Crest Securities LLC
  26. Piper Jaffray & Co.
  27. Raymond James & Associates, Inc.
  28. Samuel A. Ramirez & Company, Inc.
  29. Stifel, Nicolaus & Company, Incorporated
  30. The Williams Capital Group, L.P.
  31. William Blair & Company, L.L.C.

Publish date: March 19, 2012 https://stage.adweek.com/digital/facebook-1-1percent/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT