Facebook underwriters may get 1.1% fee

SAN FRANCISCO: Facebook will pay a fee of just 1.1% to underwriters of its initial public offering (IPO), a source with knowledge of the company’s plans said.

News that the payout would be much slimmer than the typical underwriting fee came as Facebook executives highlighted the engagement of its massive user base during a meeting on Monday with about 100 analysts, investment bankers and others involved in the IPO.

Sources had said the company’s underwriters would swallow a fee much lower than the 3% to 7% that was typical on Wall Street, because of the prestige of being associated with Silicon Valley’s largest ever IPO, as well as the promise of being bankers in future to the world’s largest social network.

Facebook’s underwriters include Morganstanley, J.P. Morgan, Goldman Sachs, Bank of America, Barclays and Allen & Co. Earlier this month, the company also named an additional 25 banks as underwriters.

Analysts and investment bankers from many of these firms attended a meeting with Facebook executives at the company’s headquarters which lasted about three-and-a half hours on Monday, according to two sources who attended.

One of the attendees described the meeting as a useful opportunity for Wall Street analysts and bankers to meet various executives at Facebook, but said there was little new information shared about Facebook’s business or operations.

“It was a good first step for establishing a relationship,” said the attendee, noting that Facebook invited the guests back for a second meeting in April to go over its business in more detail. — Reuters