Twitter Inc. had been in discussion to add banks to its underwriting syndicate. This was for the social media company's upcoming initial public offering. The social media firm was also in the process of finalizing the fee structure, said three sources familiar with the matter.
Underwriters usually receive about 7% of overall IPO proceeds. However, bigger offerings could command lower fees. When Facebook Inc. launched its USD16 billion IPO, underwriters were willing to split a fee pool of just 1.1% due to the deal's size. Underwriters also agreed to the fee structure as they would get the prestige of being associated with a high profile deal, said a Reuters report.
Meanwhile, Twitter Inc. had not yet made clear what percentage of the potential IPO proceeds would be paid to underwriters.
According to analyst estimates, Twitter's valuation had been estimated to be around USD15 billion. If the social media company sold around 10% of its shares, an overall fee would come to 4% to 5%. This would mean that underwriters could split a fee pool of approximately USD60 million to USD70 million.
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