A senior investment banker from Morgan Stanley, Michael Grimes, announced his return to Wall Street this week to lead the initial public offering for SpaceX, a deal that could become the largest IPO of all time. Grimes, who previously assisted Elon Musk in taking Tesla Motors public, had left Morgan Stanley last year to join the U.S. Department of Commerce. His return coincides with the opening of the window for SpaceX's market debut.
Morgan Stanley announced Grimes's return in an internal memo on Monday, promoting him from his former role as Global Head of Technology Investment Banking to Chairman of Investment Banking. The timing is critical, as SpaceX's valuation surged to $1.25 trillion last week following its merger with xAI, an artificial intelligence startup also owned by Musk.
SpaceX is expected to raise tens of billions of dollars through its IPO to fund the construction of data centers in space and lunar colonization initiatives. According to sources familiar with the matter, if the fundraising reaches $40 billion, the more than ten banks underwriting the deal are projected to share approximately $400 million in fees. Morgan Stanley, Bank of America, JPMorgan Chase, and Goldman Sachs are anticipated to serve as the four lead underwriters, securing the largest portions of the fees.
Grimes's return positions him to partake in this potential windfall, rather than remaining in a government role as the financial event unfolds.
Grimes has built a strong connection with Musk over his nearly three-decade career at Morgan Stanley. According to a SpaceX investor familiar with both individuals, Grimes is one of the few bankers tolerated by the unpredictable entrepreneur.
Musk's relationship with Morgan Stanley is deeply entrenched. His wealth manager, Jared Birchall, and the CFO of xAI, Anthony Armstrong, both hail from the bank. Grimes himself played a key role in the 2010 IPO of Tesla Motors and assisted with the acquisition of Twitter in 2022.
During the Twitter acquisition, Musk demanded rapid execution. Sources indicate that Grimes instructed his team to work in "minutes and hours," not days, to keep pace with Musk's tempo. Text messages made public during legal proceedings related to the Twitter acquisition illustrated their rapport. In one exchange, Grimes proposed helping Musk secure $5 billion in financing from then-cryptocurrency figure Sam Bankman-Fried, whom he described as a "super genius and doer like you."
Grimes is known on Wall Street for his unconventional methods of client engagement. To secure a role in Facebook's 2012 IPO, he spent hours playing the social platform's game, FarmVille. To win the lead underwriter position for Uber's 2018 listing, he worked part-time as an Uber driver.
Grimes left Morgan Stanley a year ago, coinciding with Musk's launch of the Department of Government Efficiency (DOGE). He served as head of the Commerce Department's investment accelerator, commuting between Washington and his home near San Francisco. This career move surprised fellow bankers, who noted he was not perceived as particularly partisan.
Even after Musk departed Washington six months later, Grimes remained in his government position, reporting to Commerce Secretary Howard Lutnick. His responsibilities included leading the "Invest in America" initiative, assisting the government in acquiring a 10% stake in Intel, and advising on potential public listing plans for Fannie Mae and Freddie Mac.
During Grimes's tenure in government, the U.S. IPO market was relatively quiet, with few major tech listings. However, this year is poised to be a record period for IPOs, with companies like OpenAI and Anthropic also considering large-scale public offerings.
According to reports, many on Wall Street had speculated whether Grimes would be content to stay in government and forgo the potential massive financial gains. The answer has now been revealed.
Comments