Source: Fortune
Summary
SpaceX’s initial public offering (IPO) is set to generate a record-breaking $646 million in fees for its underwriters, led by Goldman Sachs. The IPO’s gross spread of 0.75% ties the lowest percentage on record for a conventional IPO. Despite the low percentage, the massive size of the offering will result in a huge payout for the banks involved. The lead left underwriter, Goldman Sachs, will have significant control over the allocation of shares and is expected to receive the lion’s share of the “soft dollars” paid by hedge funds and other money managers in exchange for underpriced shares.
Our Reading
The numbers tell one story. SpaceX’s IPO is a massive deal that will generate a huge payout for the banks involved. Goldman Sachs, as the lead left underwriter, will have significant control over the allocation of shares and is expected to receive the lion’s share of the “soft dollars” paid by hedge funds and other money managers. The IPO’s gross spread of 0.75% ties the lowest percentage on record for a conventional IPO. The real money will flow from “soft dollars,” which could reach $5 billion if the stock price jumps 20% on the first day. Goldman Sachs is poised to be the big winner.
Author: Evan Null
