NEW YORK: Michael Grimes, Wall Street’s Silicon Valley whisperer, appeared headed for a comeuppance.
It was 2012 and the humiliating stock-market debut of Facebook Inc. was spawning investor losses and lawsuits. That left Grimes—the offering’s architect and Morgan Stanley’s premier banker—a wounded man in the eyes of competitors. Pieces of his franchise, some thought, would soon be theirs.
Within a year, it was clear Grimes’s team was holding its ground. And as a wave of US tech startups headed for initial public offerings this year, he landed the biggest since Facebook: Uber Technologies Inc.
As the world now knows, Uber’s big moment this month didn’t go as planned, at least for small-timers who had waited a decade to buy into the ride-hailing giant.
In fact, it’s been harrowing. The stock tumbled 18% in its first two days of trading. Though it found its footing last week, it’s still 7% below the initial price of $45.
Yet by all accounts, Grimes is flying high. And this time, many in the business privately predict he will emerge unscathed. Other buzzed-about clients he’s cultivating, like Airbnb Inc., are unlikely to be put off by Uber’s rocky start, according to people close to the startups. Morgan Stanley has relationships with legions of wealthy investors and an army of more than 15,000 brokers who can pitch stocks to the masses. For now, Grimes remains the banker to beat in Silicon Valley, with one investor saying the only other competitor that’s comparable is one of Goldman Sachs Group Inc.’s top technology bankers, Ryan Limaye. Both men were trained as engineers.
Venky Ganesan, a partner at Menlo Ventures, which backed Uber, defended Grimes as “one of the top bankers of his generation." How Grimes, 52, has become technology’s Teflon banker underscores a sobering truth about the IPO game: People on the inside can get wildly rich, even when many ordinary investors don’t. After years of private funding rounds that helped Uber put off going public, Morgan Stanley’s bankers led almost 30 securities firms in finding buyers to raise an additional $8.1 billion, regardless of the subsequent stock-market swings. Increasingly, that’s life for retail investors at the bottom of the food chain. They wait to participate in Silicon Valley’s successes. When the public listing finally arrives they tend to buy new stock at the dearest of prices. Indeed, they flocked to Uber. According to TD Ameritrade, individuals accounted for an unusually large amount of trading the day Uber hit the market. It was among the top five retail debuts since Facebook.
Those investors can still end up doing just fine over the long haul. Witness Grimes’s initial stumble with Facebook: The stock suffered technical glitches as trading began, then tipped into a months-long slide, losing half its value. But ultimately, it roared back and is now worth almost five times its initial price. A spokeswoman for New York-based Morgan Stanley declined to comment.
Grimes clinched Uber’s IPO with a pitch to its board that showed he was fluent in the same lingo spoken by employees, according to people familiar with the matter who asked not to be named describing the talks. Goldman Sachs, which started wooing Uber’s leaders years ago and even bought a stake, was listed second on the deal, followed by Bank of America Corp.
“You could put him in the room with Sundar or Satya or a young unknown founder, and he’s immediately talking their language," said Jim Goetz, a partner at venture capital firm Sequoia Capital, referring to the heads of Google and Microsoft Corp. “Most of the time, bankers lead with financials. For Michael that’s an afterthought, and that’s a blessing in Silicon Valley."
Grimes doesn’t always win, of course. Morgan Stanley is this year’s top lead underwriter of technology IPOs, but Goldman’s tech, media and telecom team, led by Nick Giovanni and Pete Lyon, currently ranks as that industry’s premier M&A adviser, according to data compiled by Bloomberg.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.