According to Bloomberg News, two sources disclosed that Facebook will meet its its IPO (initial public offering) underwriters tomorrow in New York to discuss the listing details.
The anonymous insiders said Facebook will hold talks with its main underwriters, starting from Morgan Stanley, then JP Morgan Chase and Goldman Sachs. The company’s executives will talk about the growth prospects for Facebook as well as the details of the Facebook IPO road show.
According to Facebook’s roadshow schedule, it will hold an investor conference in New York on May 7, in Boston on May 8and Palo Alto, California on May 11, respectively.
Facebook has hired 33 underwriters, and Morgan Stanley is working as the representative of the underwriting syndicate of the Facebook IPO. In the amended regulatory filing submitted on February 1, Facebook also announced to hire JP Morgan Chase, Goldman Sachs, Bank of America, Barclays Capital and Allen & Co. as its underwriters. According to the latest amended prospectus, Facebook has added two new underwriters E*Trade Securities and Itau BBA USA Securities, the U.S. subsidiary of the Brazilian bank Itau Unibanco.
Facebook intends to raise $11.8 billion through the IPO. The final IPO price will be determined on May 17. Two sources familiar with the Facebook IPO plan said the company will pay underwriting commission of 1% of the proceeds collected in the public offering to the underwriters. On the basis of this portion, if the Facebook IPO price is set at the top of its previously announced IPO price range, the underwriters will get payment of approximately $130 million. Morgan Stanley will enjoy the largest piece of the cake. Read more about the Facebook IPO price range of $28-$35.
According to Bloomberg data, the 1.1% underwriting commissions Facebook paid to the underwriters are only fifth of the U.S. IPO standard rate. For larger IPOs, underwriters are usually willing to accept lower underwriting fees, as the underwriting business such as the hihgly-focused Facebook IPO will help to promote the company’s future business. After listing Facebook will disclose the actual underwriting commissions.
Facebook underwriters spokesmen all declined to comment on these matters. Facebook spokesman Jonathan Thaw has not given a response yet.