Wall Street investment banks engaged in fierce competition for the lead underwriter role in SpaceX's record-breaking initial public offering (IPO), the largest ever for Elon Musk's space company. Goldman Sachs secured the key underwriter position over Morgan Stanley, where Michael Grimes, long regarded as a Musk insider, works, drawing attention to a shifting power dynamic on Wall Street.
According to the Financial Times (FT) and The New York Times (NYT), Goldman Sachs took the "lead left" position in the recently disclosed SpaceX prospectus. Lead left refers to the lead underwriter whose name appears in the upper-left corner of an IPO prospectus. The role oversees the entire listing process, including pricing, investor roadshows, and share allocation.
Goldman Sachs reportedly began drafting SpaceX's IPO registration statement (S-1) as early as December last year. That was before SpaceX's listing plan was first made public at the World Economic Forum (WEF) in Davos in January.
Wall Street had initially expected Morgan Stanley to have the upper hand in the competition for lead underwriter. Michael Grimes, who handled Musk's Twitter acquisition and other deals and was considered a close Musk ally, returned to Morgan Stanley earlier this year.
Grimes left Morgan Stanley last year after about 30 years at the firm to work at the U.S. Department of Commerce under the Donald Trump administration. There, he participated in U.S. government investment efforts, serving as a dealmaker in strategic industry investments such as Intel. He returned to Morgan Stanley as the SpaceX listing approached, but failed to deliver the expected outcome.
Industry observers say his focus on managing Washington networks and politically sensitive industry deals affected this IPO. "Morgan Stanley was slow to move," one source told the FT. "It relied too heavily on its relationship with Musk."
Goldman Sachs, by contrast, is said to have spent considerable time building its relationship with SpaceX. According to Bloomberg, Goldman Sachs Chief Executive Officer (CEO) David Solomon used the direct message (DM) function on X to reach Musk personally. He chose to communicate directly through Musk's own platform. The episode illustrates how aggressively Wall Street investment banks are moving to secure major clients.
Goldman Sachs has maintained a working relationship with Musk through deals including the Tesla IPO and SolarCity's listing. Some analysts say winning the SpaceX IPO mandate marks a successful repair of the relationship, even after the firm clashed with Musk during his 2022 Twitter acquisition.
Goldman Sachs is expected to reap substantial profits from the deal. The NYT estimated that fees paid to underwriters from the SpaceX listing will exceed $1 billion (about 1.5 trillion won). The listing fees will be split among 22 joint underwriters, but the lead underwriter typically takes the largest share. The lead underwriter often continues to be involved in lending and serves as an adviser on various transactions even after the listing.
Morgan Stanley will retain a major role. The bank is expected to handle price stabilization activities to manage sharp share price fluctuations immediately after the listing. The role involves cushioning market shocks and managing the share price trajectory in the aftermath of the IPO.
Some sources said the gap between Goldman Sachs and Morgan Stanley reflects a notation convention as much as a substantive difference. Because the two banks' names were listed in alphabetical order, Morgan Stanley was placed second, even though the actual scope of work performed by the two firms did not differ significantly.
