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Goldman-Led Twitter Underwriters Share $59.2 Million in IPO Fees

Goldman Sachs is leading Twitter’s IPO, with help from firms including Morgan Stanley and JPMorgan Chase & Co., regulatory filings show. Photographer: Scott Eells/Bloomberg
Goldman Sachs is leading Twitter’s IPO, with help from firms including Morgan Stanley and JPMorgan Chase & Co., regulatory filings show. Photographer: Scott Eells/Bloomberg

Nov. 7 (Bloomberg) -- Goldman Sachs Group Inc. and other underwriters on Twitter Inc.’s initial public offering will share about $59.2 million for managing the sale after accepting one of the smallest fee rates for a U.S. IPO this year.

The banks are receiving 3.25 percent of the $1.82 billion that Twitter raised in its IPO, according to a regulatory filing today. Goldman Sachs led the sale, with help from firms including Morgan Stanley and JPMorgan Chase & Co. The fee pool is typically split unevenly among underwriters, with larger shares going to banks more actively involved in the process.

Twitter’s banker fees reflect a smaller proportion than underwriters have received in nearly every U.S. initial offering this year, data compiled by Bloomberg show. While investment banks use fee income as a major measure of success in deal underwriting, firms are sometimes willing to take a smaller share of proceeds for high-profile sales that may generate future business.

“Goldman being the first name on the S-1 has little to do with fees,” Max Wolff, chief economist and strategist at ZT Wealth, said by phone from New York. “This is about Goldman rebalancing itself as a serious leader and competing with Morgan Stanley’s dominant position in technology.”

Goldman Sachs was responsible for placing almost 27 million of Twitter’s 70 million IPO shares, the filing shows. That indicates the firm will get an estimated 39 percent of the fee pool, or $22.8 million, according to data compiled by Bloomberg. Morgan Stanley would receive the second-biggest share of the fees, at 21 percent, or $12.1 million, and JPMorgan is set for $9.5 million, the data shows.

Valley Bankers

San Francisco-based Twitter still paid a higher rate than Facebook Inc., where underwriters collected about 1.1 percent of the $16 billion raised in May 2012. Excluding Twitter, U.S. IPOs overall had paid underwriters an average fee of 5.6 percent this year through yesterday, according to data compiled by Bloomberg.

Twitter’s IPO was managed by some of the best-known investment bankers from Silicon Valley to Wall Street. Anthony Noto, the Goldman Sachs co-head of technology investment banking who led the offering, according to a person familiar with the matter, formerly served as the chief financial officer for the National Football League, a job he held until 2010.

Michael Grimes, Morgan Stanley’s co-head of tech banking who helped helm the offering, according to another person, has led other high-profile Internet IPOs by Facebook and LinkedIn Corp. JPMorgan Vice Chairman Jimmy Lee managed the Twitter offering for that bank, a person said. The people asked not to be named because the information is private.

Prime Spot

Twitter’s IPO is the largest that Goldman Sachs has led for a U.S. technology or Internet company, data compiled by Bloomberg show. The offering is helping the investment bank bounce back after losing the prime spot on social-media IPOs from LinkedIn to Facebook. The lead-left role -- so named because of the way the bank names are printed on the offering prospectus -- is typically the most lucrative job for advisers in a stock offering.

JPMorgan’s Lee worked with Liz Myers, the global head of equity capital markets, as well as Noah Wintroub, who heads Internet and digital media investment banking.

Twitter started trading today, listed on the New York Stock Exchange under the symbol TWTR. The stock opened trading at $45.10, implying a market value of about $24.6 billion.

Among the largest U.S. IPOs this year, only Plains GP Holdings LP paid a smaller percentage fee to its underwriters when it raised $2.91 billion in an October offering, including an over-allotment, data compiled by Bloomberg show. Banks led by Barclays Plc, Goldman Sachs and JPMorgan received a 3 percent share of the cash raised in that IPO, the data show.

To contact the reporters on this story: Leslie Picker in New York at lpicker2@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net

To contact the editors responsible for this story: Ben Livesey at blivesey@bloomberg.net; Jeffrey McCracken at jmccracken3@bloomberg.net

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