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Reports: Facebook To Pay Underwriters 1.1% Fee In IPO

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3/19/2012 10:14 PM ET

Facebook will pay only a 1.1 percent fee to the 31 underwriters of its much anticipated initial public offering, according to media reports on Monday. The rate is said to be much smaller than the 6 percent to 7 percent fee that is typical on Wall Street.

But Facebook's underwriters are reportedly willing to share a smaller fee as the absolute size of the payout for the high-profile IPO will still be large. They are also said to be lured by the promise of being bankers in future to the world's largest social networking site.

Menlo Park, California-based Facebook disclosed in a regulatory filing in February that it has filed for an IPO of up to $5 billion of its Class A common stock, valuing the company at about $100 billion. The social networking site intends to apply to list its common stock under the symbol "FB".

Assuming Facebook raises $5 billion from its IPO, its underwriters will get $55 million. Morgan Stanley, the lead underwriter, will probably earn a bigger cut of the total.

In early March, Facebook said it added 25 new underwriters and secured two new credit facilities totaling $8 billion as it prepares for its IPO.

The new underwriters that have been added include banks such as Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, RBC Capital Markets LLC and Wells Fargo Securities LLC. Facebook also added 20 smaller companies as underwriters. The additions take the total number of underwriters for its IPO to 31.

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by RTT Staff Writer

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