Goldman Sachs Scores Coup with Twitter IPO

Daily Herald (Arlington Heights, IL), September 14, 2013 | Go to article overview

Goldman Sachs Scores Coup with Twitter IPO


Byline: Bloomberg News

Goldman Sachs Group Inc., 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 Thursday 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 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.'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, 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 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. …

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