Bloomberg News

Goldman Sachs Scores Coup With Lead Position on Twitter IPO

September 13, 2013

Goldman Sachs Headquarters

Pedestrians pass in front of 200 West Street, which houses the headquarters of Goldman Sachs Group Inc., in New York. Photographer: Scott Eells/Bloomberg

Goldman Sachs Group Inc. (GS:US), on pace to be the top adviser on U.S. initial public offerings for the first time since 2009, scored a coup by landing the lead role on Twitter Inc.’s sale.

Twitter, which announced yesterday that it filed for an IPO, gave Goldman Sachs the job of running the sale, a person with knowledge of the matter said. JPMorgan Chase & Co. and Morgan Stanley (MS:US) will also be bankers for the IPO, said another person, who asked not to be identified because the process is private. Deutsche Bank AG also has a part, another person said.

Goldman Sachs lost out to rival Morgan Stanley on similar roles in the highest-profile technology IPOs in recent years, including Facebook Inc. (FB:US)’s $16 billion sale last year and offerings by Groupon Inc. and Zynga Inc. the year before. San Francisco-based Twitter may have opted for Goldman Sachs after the other offerings drew criticism and complaints from shareholders, according to Michael Holland of Holland & Co.

“The Facebook experience was one that was so egregious that Twitter did a fairly predictable thing,” said Holland, who oversees more than $4 billion as chairman of the New York-based money manager. “When the biggest and best have needed IPO services, Goldman is always a finalist.”

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.

Facebook Complaints

Facebook, Zynga and Groupon each declined by more than half in the months following their offerings, data compiled by Bloomberg show. Disappointing performance by Facebook following its offering helped to freeze the U.S. IPO market for more than a month and led to shareholder complaints over the valuation of the offering.

Facebook eventually regained (FB:US) losses following its IPO, closing above its IPO price on Aug. 2. The shares fell 1.3 percent to $44.15 as of 11:14 a.m. in New York today, still above the $38 debut price.

“Twitter has studied the Facebook IPO experience in detail and doesn’t want a repeat,” said Francis Gaskins, president of Marina Del Rey, California-based researcher IPOdesktop.com.

This year, Morgan Stanley has led or won lead roles on at least four technology IPOs, data compiled by Bloomberg show. The bank managed a $219 million share sale for online coupon provider RetailMeNot Inc., including the over-allotment option. The IPO of Cvent Inc., the maker of event-management software which raised $135 million, was also Morgan Stanley-led.

Accelerating Sales

Mary Claire Delaney, a New York-based spokeswoman for Morgan Stanley, Michael DuVally, a spokesman for Goldman Sachs, Tasha Pelio, a spokeswoman for JPMorgan, and Mayura Hooper, a spokeswoman for Deutsche Bank, all declined to comment. Jim Prosser, a spokesman for Twitter, also declined to comment.

Goldman Sachs led Tableau Software Inc.’s IPO in May, which raised $292 million including an over-allotment.

While Twitter hasn’t said how much it will seek to raise, New York-based Goldman Sachs could increase its lead over rivals if Twitter’s offering is completed this year. The bank is ranked first among advisers of U.S. IPOs with an estimated 11 percent share of the market so far this year, data compiled by Bloomberg show.

Goldman Sachs rose 0.5 percent to $164.19 a share today. Morgan Stanley was up 0.4 percent at $28.13.

Goldman’s Deals

Citigroup Inc. is ranked second in the U.S., while Morgan Stanley currently ranks in seventh place, the data show. Globally, Morgan Stanley has the largest share of the IPO underwriting market, with 8.3 percent, while Goldman Sachs is in fourth place.

New share sales have accelerated following gains in the broader stock market. There have been 124 U.S. IPOs this year, more in number than the comparable period of any year since 2007, data compiled by Bloomberg show.

Morgan Stanley, led in tech by Michael Grimes, and Goldman Sachs have long been rivals in Silicon Valley, vying to take the hottest companies public. Goldman Sachs’s technology team is led by George Lee and Anthony Noto, who returned to the bank in 2010 after a stint as the National Football League’s finance chief.

Goldman Sachs led the IPO this year for Envision Healthcare Holdings Inc. (EVHC:US), the hospital operator which raised $1.1 billion. The bank also led the IPO of single-family rental homeowner American Homes 4 Rent, which raised $812 million, and theme-park operator SeaWorld Entertainment Inc., which attracted $807 million from investors. The IPO proceeds all include over-allotment options.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $186.1 USD
    • 0.81
    • 0.44%
  • MS
    (Morgan Stanley)
    • $35.29 USD
    • 0.11
    • 0.31%
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