Bankers handling Facebook Inc. (FB)’s initial public offering may collect fees of as little as 1 percent to 1.5 percent of the total amount raised in the sale, said two people with knowledge of the matter.
Facebook hasn’t set a final fee, said the people, who declined to be named because the information is private. The Menlo Park, California-based company hired Morgan Stanley (MS) to lead its IPO and seeks to raise $5 billion, according to a regulatory filing today. That amount is subject to change, the people said.
At 1 percent, Facebook would be paying one-fifth the rate banks collected for managing the biggest U.S. Internet IPOs last year, which raised only a fraction of what Facebook is seeking. The average fee on the IPOs of Yandex NV, Zynga Inc. (ZNGA), Renren Inc. and Groupon Inc., the four Internet companies that each raised more than $500 million in U.S. initial offerings last year, was 5.1 percent, data compiled by Bloomberg show.
With larger IPOs, banks can often afford to take a smaller percentage fee, and high-profile offerings such as Facebook can lead to future business. JPMorgan Chase & Co., Goldman Sachs Group Inc. (GS), Bank of America Corp. (BAC), Barclays Plc (BARC) and Allen & Co. will also work on the sale, the filing showed.
Sarah Feinberg, a spokeswoman for Facebook, and Pen Pendleton, a Morgan Stanley spokesman, declined to comment.
Facebook is also considering allocating about 20 percent of its stock to retail investors, though no decision has been made yet, one person said.
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