Facebook To Pay About 1.1% Fee To Banks For IPO

Facebook is planning to raise $5 billion in an IPO and supposedly they will be paying underwriters a 1.1% fee according to sources with Bloomberg. The fee will be shared among Facebook’s 31 banks serving as underwriters. The lead bank will earn a bigger cut of the total.

The 1.1% rate is about one-fifth of the typical rate for IPOs. Underwriters are usually paid an average of 5.48%. However the banks were willing to make concessions because it is a high-profile offering and it can lead to future business.

The banks involved in this deal include JPMorgan Chase & Co., Goldman Sachs Group, Bank of America, Barclays, and Allen & Co. Other banks added this month include Citigroup, Credit Suisse, Deutsche Bank, M.R. Beal & Co., Muriel Siebert, and William Blair & Co.

This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at
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