JPMorgan Nabs Lucrative Stabilization Role in Lyft IPO
An illuminated Lyft Inc. sign is seen on the dashboard of a ride share vehicle at Los Angeles International Airport (LAX) in Los Angeles, California, U.S. (Photographer: Patrick T. Fallon/Bloomberg)

JPMorgan Nabs Lucrative Stabilization Role in Lyft IPO

(Bloomberg) -- JPMorgan Chase & Co. will take on the profitable job of overseeing Lyft Inc.’s stock in the early hours of trading after the ride-hailing company goes public, people familiar with the matter said.

JPMorgan was one of three lead underwriters for an initial public offering named in Lyft’s filing Friday, alongside Credit Suisse Group AG and Jefferies Financial Group Inc. Altogether, 29 banks were listed as participating in the offering.

The IPO stabilization agent, also known as syndicate trading manager, oversees the first-price setting and manages additional shares allotted underwriters in a so-called greenshoe option. It’s a coveted role for banks because it also comes with the potential for more commissions on trades. Lyft won’t disclose proposed terms for its IPO, including whether it will include a greenshoe option, until a later filing.

Representatives for Lyft and JPMorgan declined to comment.

With its filing Friday to the U.S. Securities and Exchange Commission, Lyft pulled out in front of larger rival Uber Technologies Inc., which has filed confidentially for an IPO and is expected to follow Lyft in going public this year. Uber has lined up Morgan Stanley to lead its IPO and Goldman Sachs Group Inc. is expected to play a role, people familiar with the matter have said.

Lyft is targeting a public valuation of $20 billion to $25 billion for its offering based on its fast-pace growth and despite mounting losses, a person familiar with the matter has said. Its listing will likely be eclipsed by Uber’s. Bankers seeking to handle Uber’s offering told the company it could be valued at as much as $120 billion, people familiar with the matter have said previously.

Lyft’s public roadshow in which underwriters pitch the IPO to potential investors is expected to begin the week of March 18, a person familiar with the matter has said.

While Lyft’s revenue doubled to $2.2 billion in 2018 from 2017, it lost $911 million last year, according to its filing. Its losses would be among the largest ever for a first-time public company.

Looming Question

One looming question is whether Fidelity Investments, which owns a 7.7 percent stake in Lyft, intends to buy, sell or hold shares in the IPO.

In its prospectus Friday, Lyft’s founders pitched investors on a company that would “redesign our cities around people, not cars.” That’s despite running a business that today generates almost all of its revenue through car-based ride-hailing.

Lyft’s two founders are together expected to take near-majority voting control of the company’s shares as part of the IPO. The company plans to introduce a sunset provision so that voting power will eventually expire, said one of the people familiar with JPMorgan’s role, all of whom asked not to be identified because it wasn’t public.

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