Twitter could be least lucrative of any big US IPO

by Rachel Baker on October 20, 2013

Quartz has a story posted at the beginning of last week about the how Twitter will be the least money making IPO since Zynga.

As Bloomberg reported on Saturday, Twitter is expected to pay its bankers, led by Goldman Sachs, a fee of about 3.25% to underwrite its initial public offering, expected to be $1 billion or more. The Wall Street Journal takes things a step further (paywall), saying Twitter is “squeezing” its bankers to get “unusually favorable terms” in the IPO.

That is more than three times as much Facebook paid, in percentage terms, for its mammoth IPO last year. However, Facebook raised much more equity ($16 billion to be precise), so the total fee was a lot higher. Perhaps fairer comparisons are LinkedIn, which paid a 7% fee to raise about $406 million, and Groupon, which paid 6% to raise $700 million, both in 2011. It could be a case of banks being desperate to get on the hottest IPO of the year, or the company flexing its muscles after Facebook’s foibles; whichever way you look at it, Twitter is getting a good deal.

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