Goldman Sachs eclipses Morgan Stanley’s Michael Grimes on SpaceX IPO

{"text":[[{"start":12.55,"text":"Michael Grimes, the Morgan Stanley banker long viewed as Elon Musk’s closest adviser on Wall Street, has lost the battle to lead SpaceX’s historic initial public offering after being outmanoeuvred by Goldman Sachs."}],[{"start":26.4,"text":"The Silicon Valley rainmaker behind blockbuster listings including Facebook, Uber and Palantir, as well as Musk’s $44bn Twitter buyout, had been widely expected to run SpaceX’s flotation."}],[{"start":40.9,"text":"But Goldman Sachs secured the coveted “lead left” role after working on the IPO preparations for years, according to people familiar with the matter. "}],[{"start":50.4,"text":"Goldman’s role as lead strategic adviser gives it control over pricing and valuation discussions, the investor roadshow and important decisions on equity allocations, according to people familiar with the structure of the offering — a significant coup for the bank over its rival Morgan Stanley."}],[{"start":67.05,"text":"Goldman had drafted the S-1 prospectus in December, before news of the planned IPO first emerged at the World Economic Forum in Davos in January, the people said. The Goldman bankers advising Musk are co-head of investment banking Kim Posnett, head of equity capital markets David Ludwig, their boss Dan Dees and senior adviser Susie Scher."}],[{"start":90.19999999999999,"text":"The win positions Goldman at the helm of what could become one of the most lucrative underwriting mandates in Wall Street history."}],[{"start":97.94999999999999,"text":"Morgan Stanley still maintains a key role, having carried out roughly the same amount of work on the listing as Goldman, with some people suggesting it ranked second only because the two lead advisers are listed alphabetically — a sign of the fierce rivalry between the two firms."}],[{"start":113.69999999999999,"text":"SpaceX also said in its filing that Morgan Stanley would hold the “stabilisation” mandate, giving it responsibility for supporting SpaceX’s shares in the volatile period immediately after the IPO, an unusually public move. Uber and Airbnb, whose IPOs were both led by Morgan Stanley, did not name their so-called stabilisation agents. "}],[{"start":131.85,"text":"A person close to SpaceX who is independent from both banks said that the stabilisation was likely to be the most lucrative role."}],[{"start":null,"text":"

"}],[{"start":139.7,"text":"Many bankers had expected the return of Grimes, 59, to Morgan Stanley in February to give the bank an edge in securing the coveted lead role."}],[{"start":149.35,"text":"He left the bank last year after almost three decades to serve as an adviser at the Department of Commerce under US President Donald Trump. The move was widely seen as following his banking client, Musk, who helmed the shortlived so-called Department of Government Efficiency."}],[{"start":166.5,"text":"In Washington, Grimes oversaw the US government’s investment unit, acting as an in-house dealmaker as the administration acquired stakes in strategically important companies including Intel and USA Rare Earth."}],[{"start":180.05,"text":"He returned to Morgan Stanley, just as banks were jockeying for senior roles on the SpaceX IPO. Since then, Grimes has spent much of his time cultivating relationships tied to the commerce department and advising on strategic transactions linked to rare earths, semiconductors and other politically sensitive industries, rather than the tech IPO work. "}],[{"start":202.35000000000002,"text":"“Morgan Stanley showed up late, to be frank,” said a person familiar with the process. “And over-relied on Grimes’ relationship with Elon.” "}],[{"start":210.15000000000003,"text":"While Grimes remains involved in the SpaceX listing, his influence has been significantly smaller than many anticipated. A person involved in the IPO who does not work at either bank said that Morgan Stanley’s Kate Claassen and Colin Stewart have been involved “every day” on the listing process. "}],[{"start":226.35000000000002,"text":"Morgan Stanley and Goldman declined to comment. SpaceX did not immediately respond to a request for comment."}],[{"start":233.90000000000003,"text":"Goldman’s longstanding relationship with Musk stood it in good stead to secure the starring role. The bank led Tesla’s IPO in 2010 and SolarCity’s listing in 2012, helping finance the rapid expansion of Musk’s corporate empire."}],[{"start":null,"text":""}],[{"start":248.75000000000003,"text":"Even so, Goldman’s rivals were convinced that the bank led by David Solomon would lose the lead role after falling out with Musk during his 2022 acquisition of Twitter."}],[{"start":258.95000000000005,"text":"Goldman advised the social media company’s board during the contentious takeover, which Musk was eventually forced to complete at the original $44bn price, despite threatening to walk away unless the price was lowered."}],[{"start":272.20000000000005,"text":"By contrast, Morgan Stanley and Grimes acted as Musk’s lead M&A adviser on the Twitter transaction and provided risky bridge financing that saddled the bank with billions of dollars in paper losses when the private valuation of the company fell. "}],[{"start":287.20000000000005,"text":"The debt eventually recovered to trade at face value after Musk merged Twitter, then rebranded X, with his AI start-up xAI in March 2025 at a $110bn valuation."}],[{"start":299.85,"text":"Several Goldman bankers, as well as Morgan Stanley staff outside Grimes’ orbit, secured coveted “daily badge” access to SpaceX’s offices during preparations for the flotation at Starbase in Texas. Grimes did not, the people said."}],[{"start":null,"text":""}],[{"start":314.35,"text":"Morgan Stanley still stands to earn substantial fees from the SpaceX transaction, outstripping other leads such as Bank of America, Citigroup and JPMorgan."}],[{"start":324.05,"text":"But for Grimes, the IPO has become a striking illustration of how quickly influence can shift on Wall Street."}],[{"start":331.85,"text":"Another Morgan Stanley tech M&A banker, Antony Armstrong, has also fallen out of favour. He went to work for Musk’s AI start-up xAI as chief financial officer in October. However, he left soon after in April after xAI was merged with SpaceX and he found himself reporting to the rocketmaker’s long-term CFO, Bret Johnsen."}],[{"start":353.05,"text":"However, there remain risks for Goldman due to the complexity of the heavily lossmaking company — which has businesses ranging from reusable rockets, Starlink satellites, social media and an AI model builder far behind those at the frontier — as well as its controversial and mercurial CEO."}],[{"start":373.1,"text":"“This is a defining moment, but the stakes are high and it has to go perfectly,” said one person involved in the deal. “There is a lot that can go wrong and if it does, Morgan Stanley and Grimes will be dining out on it for years.”"}],[{"start":396.45000000000005,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779422330_5149.mp3"}