The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Facebook IPO: Without fear, for favors.. | Deal Insight

Underwriting was handed out to three more bankers last week at Facebook Headquarters with Morgan Stanley, JP Morgan and Lead right Goldman Sachs still the primary book runners. The new banks add to the group including Bank of America, Barclays and Allen& Co  and will earn commissions for promising to buy any unsubscribed shares in the $10 bln IPO, apparently easy money as the firm rides an unprecedented wave of optimism on social media platforms  valued at over $44 in the secondary market right now.

the pressure to add more underwriters came as Facebook needs to borrow short term to pay off tax liabilities of its employees when stock options are vested and filed as sold once the shares are listed and including the sales in the secondary secondmarket/Sharespost portals. The addition of underwriters ensures it has the biggest credit lines in history dwarfing Google’s $3 bln witha  $5 bln line on offer from banks. The three, Deutsche Bank, Credit Suisse and Citi will extend a new $2.5 bln in credit lines to the social network. The other $2.5 bln was extended by the lead bankers and Bank of America and Barclays, in sufficient to meet the Menlo Park, CA overdraft requirements on IPO day.

Deutsche Bank has been lording it in Tech IPOs and its absence might have affected its IPO rankings this year too while JP Morgan penciled in visits from Dimon and Vice Chairman James Lee to help it along the rankings this year.


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