Morgan Stanley Wins Stabilization Role for Uber IPO

(Bloomberg) -- Morgan Stanley will take on the profitable job of overseeing Uber Technologies Inc.’s stock in the early hours of trading after the global ride-hailing giant goes public, people familiar with the matter said.

Morgan Stanley, Goldman Sachs Group Inc. and Bank of America Corp. are the lead underwriters listed in Uber’s confidential filing with the U.S. Securities and Exchange Commission for an initial public offering, said the people, who asked not to be identified because the details aren’t public. Barclays Plc., Citigroup Inc. and Allen & Co. are also working on preparations for the listing by the world’s largest ride-sharing company, the people said.

The job of the stabilization agent, also known as syndicate trading manager, is to make the first hours of trading go smoothly. The role, which includes managing additional shares allotted underwriters in a so-called greenshoe option, is a coveted one for banks because it also comes with the potential for more commissions on trades.

It’s a second key role for Morgan Stanley in the planned listing. The bank also helped Uber write the prospectus for the offering, which is expected to be filed publicly filed this month, a person familiar with the matter said.

Representatives for Uber and Morgan Stanley declined to comment.

Uber could be valued at as much as much as $120 billion in an IPO, people familiar with the matter have said. It’s expected to be the biggest listing this year and could be one of the 10 largest listings of all time. The offering is expected to net millions of dollars in fees for the banks that work on the process, especially the lead underwriters and stabilization agent.

Lyft’s IPO

Its smaller rival Lyft Inc. went public last week on the Nasdaq Global Select exchange. The shares jumped in their debut Friday, but fell below the $72-a-share offering price on Monday, worrying some investors and analysts before recovering. On Thursday, Lyft’s shares closed at $72.

San Francisco-based Uber’s public roadshow, during which underwriters pitch the IPO to would-be investors, is expected to begin as soon as late April, said one of the people. While Uber has previously disclosed some details of its finances, its SEC filing will give potential public market investors the first full look at its results, plus other key metrics breaking down its operations. Details on the number of shares to be offered and the intended price range likely won’t come until a later filing.

Under Uber’s previous chief executive officer, Travis Kalanick, the company had a close relationship with senior Goldman Sachs executives, including ex-Chief Operating Officer Gary Cohn, who stepped down last year as the head of President Donald Trump’s economic council. Uber’s former acting chief financial officer, Gautam Gupta, had worked as a vice president at Goldman. Emil Michael, once Uber’s top dealmaker, had worked at the bank, too.

Under current Uber CEO Dara Khosrowshahi and CFO Nelson Chai, the company’s relationship with Morgan Stanley deepened.

In 2016, Morgan Stanley led Uber’s first funding round in the junk debt markets. Even though the $1.15 billion loan deal was determined to have run afoul of leverage guidelines, Morgan Stanley was back in the saddle in a subsequent round, taking an advisory role to help Uber raise $2 billion in high-yield bonds.

To contact the reporters on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net;Olivia Zaleski in San Francisco at ozaleski@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Mark Milian at mmilian@bloomberg.net, Michael Hytha, Anne VanderMey

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