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Many Uber pilots earn a few dollars more. Michael Grimes has a bigger prize in mind.
Mr. Grimes, Morgan Stanley's largest technology banker, has worked for years as a driver for the help desk, according to people familiar with the subject. This lateral jostling – barely necessary given his multi-million dollar salary on Wall Street – could allow Morgan Stanley to win a role in the most anticipated stock market debut in recent years.
In valuing the nine-year-old company to the tune of $ 120 billion, an initial public offering to Uber's savings would reward investor bankers with tens of millions of dollars in fees and an equally valuable bragging rights .
Morgan Stanley
and
Goldman Sachs Group
Inc.
GS 2.97%
recently presented Uber with presentations on an IPO that could be launched in early 2019, the Wall Street Journal reported on Tuesday. Some people know that Morgan Stanley is the favorite to win the coveted role of best underwriter, which generates higher fees and prestige.
Investment banks are fiercely competing in Silicon Valley, where Morgan Stanley has been the # 1 underwriter of IPOs listed in the US in four of the past five years, according to Dealogic. It is a booming business that is growing when the market is buzzing – like today – and moribund when the enthusiasm of investors calms down.
But choosing the winners and landing the best missions is never easy. While Uber co-founder Travis Kalanick was CEO, the company told the banks that working for competitive carpooling services would prevent them from doing business with Uber, according to people close to the case.
The stakes are now higher than ever. After a slow period in which many flush startups have preferred to stay private, the IPO market is booming.
Global technology companies have sold $ 123 billion of shares so far this year, up from $ 84 billion at the same time in 2017, according to Dealogic. Share subscription fees increased by 40% at Goldman, Morgan Stanley and
JPMorgan Chase
& Co. in the first nine months of this year.
Dropbox
Inc.
Eventbrite
Inc.
and
Spotify technology
AG
SQUARE -3.32%
are among the many high profile companies to become public. The biggest launches are yet to come: Uber, Lyft Inc., Pinterest and Airbnb Inc. are all planning an IPO in 2019 or 2020.
For Wall Street banks eager to take advantage of the offers, the preparations began years ago.
Goldman backed Uber early. He invested in the company in 2011 at a valuation of about $ 200 million, earning a stake that could generate a profit of $ 1 billion in a possible IPO, said people familiar with the subject. In 2015, Goldman sold to customers of its private bank bonds bonds converted into Uber shares at a price lower than the company's IPO price. Gary Cohn, the bank's long-time senior executive, frequently visited Uber's headquarters in San Francisco and was close to Mr. Kalanick, who said of Goldman in 2015 that "we are big fans of these guys" .
With a conservative estimate of $ 1 billion, the profits from its investment in Uber would represent 10 percent of Goldman's annual pre-tax profits and could put the bank in an uncomfortable position if it were perceived to be conducting a transaction that would result in a windfall. personal.
Morgan Stanley has been courting Uber for years. When the bank authorized Uber to maneuver its employees on a business trip in 2014, a press release marked the event. In 2016, it took out a US $ 1.5 billion loan for Uber, the company's first major loan and one of the very first times that a technology startup with loss-making capital has leveraged the debt.
In the same year, Morgan Stanley invested hundreds of millions of dollars with its wealthy clients to invest in Uber, despite the company's unwillingness to provide key financial information. The bank is currently the main arranger of a Uber bond sale of the amount of $ 1.5 billion.
While the IPO was looming, Mr. Grimes occupied a central place. Graduated in computer science, he is very Californian and he is famous for his shows.
Nearly a year ahead of
Break
Inc.
His IPO, he rented a building in Snapchat's parent's office in Venice, California. When Morgan Stanley launched a music streaming service
Pandora Media
Inc.
In public, Mr. Grimes asked his bankers to wear t-shirts from their favorite rock concerts.
He is known for his obsession, even his control, in search of an agreement. Prior to appearing on the Pandora Board of Directors, Grimes spent weeks studying the use of the website by his daughter and choosing the color of the paper on which his team's speech was printed. person present at the proposal.
Looking for a lead role for Morgan Stanley in
Facebook
Inc.
During his IPO in 2012, he insisted on being the "only actor" of the transaction, claiming that having one bank in charge simplifies the process.
-Anupreeta Das and Greg Bensinger contributed to this article.
Write to Maureen Farrell at [email protected] and Liz Hoffman at [email protected]
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