In Anthropic’s IPO, Goldman and Morgan Stanley slug it out for top bank

FOR years, Wall Street giants Goldman Sachs and Morgan Stanley have been locked in a neck-and-neck race to dominate dealmaking in Silicon Valley.

On Monday (Oct 26), that rivalry heated up again, as some of the world’s largest tech titans announced a series of multibillion-dollar financing deals and revealed the details of what will probably be the largest public offering ever.

Anthropic named both Goldman and Morgan Stanley as lead underwriters on its upcoming initial public offering, a role that will generate millions of dollars in fees for the banks and an equally important amount of prestige.

With so much money on the line, even the smallest details matter to Wall Street.

In Anthropic’s prospectus – the document laying out details of the IPO – Goldman is listed farthest to the left of all the underwriters, a position that denotes the coveted title of “lead left” bank.

Morgan Stanley, for its part, is the “stabilisation agent” for Anthropic, which means the bank will be responsible for making sure trading runs smoothly on Anthropic’s first day on the market.

Anthropic did not list how much it would pay Goldman and Morgan Stanley. But SpaceX, which holds the current title of largest ever public offering, also chose the two banks as lead underwriters and paid each about US$100 million as part of its offering in June, or about 20 per cent of the roughly US$500 million fee pool.

Anthropic’s underwriting line-up echoes SpaceX’s, in which Goldman was positioned lead left on the prospectus, while Morgan Stanley was stabilisation agent. The banks ultimately brought in the same amount in advisory fees, according to filings.

Goldman and Morgan Stanley have been competing for their roles in the Anthropic IPO for months, but were informed of their official positions only within the last week, three people familiar with the matter said.

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Both banks have set up meetings for potential IPO investors to meet with executives from the company, according to four people familiar with the process.

A banner year

Also on Monday, it was announced that Goldman was the only bank on a deal to raise US$40 billion in debt to finance SpaceX’s artificial intelligence build-out.

Morgan Stanley was tapped for a lead role in helping Meta raise up to about US$98 billion in stock – nearly US$3 billion more than initially announced – and Goldman was named the stabilisation agent, after years without advising on any Meta deals.

Morgan Stanley was also among the lead banks in a US$63 billion financing deal arranged by Broadcom to finance the sale of its chips to Anthropic.

The two banks are already having banner years thanks in large part to the AI boom.

Goldman Sachs said this month that its profit had risen 29 per cent from a year earlier and revenue climbed 23 per cent, far exceeding analysts’ estimates. Morgan Stanley’s revenue rose 12 per cent from a year ago and profit was up 6.5 per cent, also beating analysts’ expectations.

In both cases, results were enhanced by higher mergers-and-acquisitions advisory fees and blockbuster revenue generated by the banks’ equities trading business.

The publicity of being a company’s top adviser on a high-profile IPO is highly prized by investment banks. Prime positions can help them market their services to other companies, as well as cajole increasingly valuable high-net-worth clients for private wealth management services.

Getting the right line-up

On Monday, Goldman Sachs employees wasted no time in trumpeting the bank’s role. In an e-mail to some clients, they highlighted that the bank was lead left on the Anthropic offering, as well as advising on the SpaceX debt deal, according to two people familiar the matter.

Both Goldman Sachs and Morgan Stanley have made longstanding preparations to position themselves for this year’s major tech deals.

Last year, Goldman Sachs rehired Nick Giovanni, who had previously spent more than two decades at the bank, to become a partner in its technology, media and telecommunications group.

Giovanni was among the Goldman Sachs bankers who led the bank’s relationship with Anthropic, two people familiar said. Another key banker for Goldman in the deal has been Jung Min, a global co-head of the bank’s technology, media and telecom group.

Morgan Stanley, for its part, welcomed back Michael Grimes this year after he served a stint in the Trump administration. At the bank, Grimes had worked on several major tech deals, including the IPOs of Uber, Facebook and Google.

Grimes also has history with Anthropic, advising the company on prior fundraising deals, two people familiar with the matter said.

The key Morgan Stanley bankers for Anthropic’s offering included Drew Guevara, the global co-head of technology investment banking, and Colin Stewart, vice-chair of global technology M&A and capital markets.

Much at stake

The banks’ underwriting skills are becoming even more critical, as investors express worries over outsize spending by AI companies, alongside other pressures such as rising interest rates.

Bankers face a delicate dance pricing an initial offering just right: picking a full enough valuation to satisfy the company and early investors in private fundraising rounds, while also leaving room for public investors to drive up the price of its shares when it starts trading.

Going forward, Goldman and Morgan Stanley, alongside the 20 other banks listed on Anthropic’s prospectus, will be responsible for selling shares of the company to public investors. These efforts are likely to include a focus on everyday investors, as well as international ones, two people familiar with the matter said.

A successful offering by Anthropic could open the market for more IPOs, while a lacklustre showing might dissuade other companies from going public.

Shares of many technology companies reacted positively to Anthropic’s IPO filing, including Nvidia, which closed up more than 2 per cent, and Advanced Micro Devices, which rose 2.8 per cent. NYTIMES