Morgan Stanley to Lead Facebook IPO

Another day, another update on the Facebook IPO, but no official S-1 filing yet.

A lot of excitement has been building up around the impending Facebook IPO. Facebook is expected to file its first S-1 filing anytime this week. Apparently, it has chosen Morgan Stanley to lead its initial public offering.

According to reports, Morgan Stanley and Goldman Sachs were the top two investment banks fighting for the coveted “left lead” position on the IPO prospectus, and the former seems to have won the battle.

Morgan Stanley also led the much hyped Groupon and Zynga public offerings in 2011, which might have tipped the scales in its favor.

On the other hand, Goldman Sachs had managed a private deal in Facebook stock almost a year ago, which didn’t go as planned.

The average underwriting fee is approximately 5% to 7% in big tech IPOs, but the fee may be much lower in Facebook’s case.

Interestingly, it seems that Facebook is planning to raise only about $5 billion, instead of $10 billion which was reported earlier.

Assuming a $100 billion valuation, this means a free float of only around 5%, which has been the case in all recent tech IPOs, presumably to keep the stock price inflated.

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