Morgan Stanley owned 2 mn shares of LinkedIn

NEW YORK, USA: Morgan Stanley owned, and could still hold, roughly 2 million shares of LinkedIn the business social-networking site that the investment bank helped bring public last month, the bank revealed on Thursday in an SEC filing for the period ending May 31.

The revelation is not as damning as it might appear at first glance.

The position is housed in the bank's asset management arm, Morgan Stanley Investment Management (MSIM), and was predominately acquired in the aftermarket. MSIM received less than 5 per cent of its holdings, or 100,000 shares, on the IPO, according to a source familiar with the process.

"Nobody would have gotten tipped that much on a hot deal, particularly one of the bookrunners," said one ECM banker that was not involved in the LinkedIn IPO. "In the past, Morgan Stanley has been very aggressive in taking positions in a stock that they really like."

It is common practice for other banks that are in the underwriting syndicate, but not conflicted, to sign off on the IPO allocation to MSIM, said the banker. That responsibility would have fallen to either Bank of America Merrill Lynch or JP Morgan, which were joint bookrunners alongside Morgan Stanley.

Last month, the banks placed 7.84m Class A shares on the IPO at US$45.00, the top of a US$42-$45 range that was increased from US$32-$35. The offering amounted to an 8.3% stake.

MSIM owns 2.04m shares, 22.7 per cent of the initial float but just 2.2 per cent of the company. LinkedIn is largely owned by insiders who hold 86.7million Class B shares.

It is hard to believe MSIM has made much, if anything, on the investment. LinkedIn shares soared to close first-day trading at US$94.25, but have steadily fallen since to a current level of US$72.01. At that level, MSIM's investment would be worth US$144.02 million.