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Morgan Stanley: Master of the Social IPO Universe

And it looks like MS snagged the lead on Facebook


Facebook’s IPO is going to be a huge money-maker for both its employees and venture capital investors — but probably not for its lead investment bank, which likely will be Morgan Stanley (NYSE:MS).

According to a Reuters report, it looks like Morgan Stanley — or other front-runner Goldman Sachs (NYSE:GS) — will take a big cut in its typical fee structure. While fees usually run between 3% to 5% of total capital raised, Facebook’s IPO could run as low as 1%. Though 1% of a possible $10 billion raised still is a cool $100 million.

But the Facebook transaction is about more than just making a nice profit. Snagging the deal could cement an investment bank’s reputation in a red-hot category.

Of course, to date, Morgan Stanley is the head honcho of social deals, with Zynga (NASDAQ:ZNGA), LinkedIn (NYSE:LNKD) and Groupon (NASDAQ:GRPN) among IPOs it can list on its resume. Here’s a closer look at how Morgan Stanley has done in the social IPO space:

Company Ticker Amount
Yandex YNDX $1.3B -47%
Zynga ZNGA $1B +5.8%
Groupon GRPN $700M -23%
LinkedIn LNKD $351M -18%
Pandora P $235M -20%
HomeAway AWAY $216M -32%

True, these deals haven’t gone perfectly, as seen with the mostly negative returns. But it is not easy to get a sense of company valuations in a new industry. And the extreme market volatility throughout 2011 certainly didn’t help.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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