Bankers eye Musk’s start-ups to make up for Twitter loss
14 July 2022 - 15:50
byAgency Staff
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Wall Street’s top investment banks that stand to lose lucrative fees from Elon Musk abandoning his $44bn acquisition of Twitter hope the start-ups backed by the world’s richest person will make up for the lost business.
Musk has been one of Wall Street’s biggest patrons, doling out nearly $500m in fees to investment banks such as Goldman Sachs and Morgan Stanley since 2000, mostly for work on Tesla, according to an estimate by Refinitiv.
This estimate does not include Musk’s privately held start-ups SpaceX, Neuralink and The Boring Company. Bankers said these companies have paid tens of millions of dollars in investment banking fee revenue over the years for their capital raisings.
The bankers, who spoke about their business prospects with Musk on condition of not being identified, said they would pursue some of these opportunities, including roles in any initial public offerings these companies may pursue down the line.
Goldman Sachs and Morgan Stanley did not immediately respond to a request for comment.
According to an earlier regulatory filing, Twitter’s financial advisers Goldman Sachs and JPMorgan Chase would receive fees amounting to a total of $133m.
According to estimates from Refinitiv, Morgan Stanley and the other financial advisers stand to make more than $55m from advising Musk, while the banks providing acquisition financing would stand to receive $150m-$200m.
This is not the first time bankers have been let down by Musk in an acquisition. He also reneged on his plan to take Tesla private for $72bn in 2018 after publicly announcing that he had the “funding secured”.
SpaceX was most recently valued at $125bn, making it one of the world’s most richly valued private companies. It is expected to go public at a significantly higher valuation, according to IPO bankers and lawyers.
To be sure, there is no guarantee that banks will lose out on the fees. This is because Twitter has sued Musk in a Delaware court to force him to complete the deal.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Bankers eye Musk’s start-ups to make up for Twitter loss
Wall Street’s top investment banks that stand to lose lucrative fees from Elon Musk abandoning his $44bn acquisition of Twitter hope the start-ups backed by the world’s richest person will make up for the lost business.
Musk has been one of Wall Street’s biggest patrons, doling out nearly $500m in fees to investment banks such as Goldman Sachs and Morgan Stanley since 2000, mostly for work on Tesla, according to an estimate by Refinitiv.
This estimate does not include Musk’s privately held start-ups SpaceX, Neuralink and The Boring Company. Bankers said these companies have paid tens of millions of dollars in investment banking fee revenue over the years for their capital raisings.
The bankers, who spoke about their business prospects with Musk on condition of not being identified, said they would pursue some of these opportunities, including roles in any initial public offerings these companies may pursue down the line.
Goldman Sachs and Morgan Stanley did not immediately respond to a request for comment.
According to an earlier regulatory filing, Twitter’s financial advisers Goldman Sachs and JPMorgan Chase would receive fees amounting to a total of $133m.
According to estimates from Refinitiv, Morgan Stanley and the other financial advisers stand to make more than $55m from advising Musk, while the banks providing acquisition financing would stand to receive $150m-$200m.
This is not the first time bankers have been let down by Musk in an acquisition. He also reneged on his plan to take Tesla private for $72bn in 2018 after publicly announcing that he had the “funding secured”.
SpaceX was most recently valued at $125bn, making it one of the world’s most richly valued private companies. It is expected to go public at a significantly higher valuation, according to IPO bankers and lawyers.
To be sure, there is no guarantee that banks will lose out on the fees. This is because Twitter has sued Musk in a Delaware court to force him to complete the deal.
Reuters
WATCH: Twitter sues Musk for contract breach
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