July 14 (Reuters) – Wall Street’s biggest investment banks, set to lose lucrative fees from Elon Musk abandoning his $44 billion acquisition of Twitter Inc, hope that startups backed by the world’s richest man will make up for lost business.
Musk is one of Wall Street’s biggest patrons, handing out nearly $500 million in fees to investment banks such as Goldman Sachs Group Inc and Morgan Stanley since 2000, mostly for work at Tesla Inc, according to an estimate by Refinitiv.
This estimate does not include Musk’s private startups SpaceX, Neuralink and The Boring Company. Bankers said those companies paid tens of millions of dollars in investment banking fee income over the years to raise capital.
Sign up now for FREE unlimited access to Reuters.com
I am registering
The bankers, who spoke about their business prospects with Musk on condition of anonymity, said they would pursue some of those opportunities, including roles in any initial public offerings those companies might pursue down the line.
Goldman Sachs and Morgan Stanley did not immediately respond to a request for comment.
For an interactive graphic, click here: https://tmsnrt.rs/3AMwve2
According to an earlier regulatory filing, Twitter’s financial advisers Goldman Sachs and JPMorgan Chase will receive fees totaling $133 million.
According to Refinitiv estimates, Morgan Stanley and the other financial advisers will make more than $55 million from advising Musk, while the banks providing the acquisition financing will receive between $150 million and $200 million.
This isn’t the first time bankers have been disappointed by Musk in an acquisition. He also abandoned his plan to take Tesla private for $72 billion in 2018 after publicly announcing that he had “secured financing.”
SpaceX was recently valued at a whopping $125 billion, making it one of the most highly valued private companies in the world. It is expected to go public at a significantly higher valuation, according to IPO bankers and lawyers.
SpaceX did not immediately respond to a request for comment.
Of course, there is no guarantee that the banks will lose from the fees. That’s because Twitter is suing Musk in a Delaware court to force him to complete the deal.
Sign up now for FREE unlimited access to Reuters.com
I am registering
Reporting by Anirban Sen in New York; Editing by Stephen Coates
Our standards: The Thomson Reuters Trust Principles.
Add Comment