Elon Musk's "preferred banker" returns to Morgan Stanley to compete for the lead role in SpaceX's IPO

Latest news indicates that Michael Grimes, a banker highly trusted by the world’s richest man Elon Musk, has left the U.S. government’s “Venture Capital Department” and returned to his former employer, Morgan Stanley, to serve as head of the investment banking division.

Undoubtedly, this appointment is clearly aimed at competing for dominance in the SpaceX IPO.

Close relationship with Musk

Grimes’s relationship with Musk can be summarized in one sentence: Grimes helped facilitate Tesla’s IPO in 2010, and the deal for Musk’s 2022 acquisition of Twitter was also orchestrated by him.

According to an investor familiar with both, Grimes has been cultivating his relationship with Musk for many years, ultimately becoming one of the few bankers tolerated by this unconventional entrepreneur.

Grimes’s career has been very focused, primarily on technology sector transactions. After graduating from college in 1987, he worked in tech investment banking at Solomon Brothers and Lehman Brothers. In 1995, Grimes moved to Morgan Stanley as head of global technology investment banking, a position he held for nearly 30 years.

Last year, after Trump returned to the White House, Grimes was recruited to the U.S. Department of Commerce as the executive director of the “U.S. Investment Accelerator” program, reporting to Commerce Secretary Raimondo. His responsibilities included leading Trump’s domestic investment initiatives, completing government investments in Intel and mining companies, and advising on the re-listing plans for Fannie Mae and Freddie Mac.

Furthermore, Grimes was originally selected to oversee the planned U.S. “sovereign wealth fund,” but due to legal, fiscal, and political constraints, the project’s priority in the White House has diminished. The White House is also considering establishing a simpler investment vehicle using existing agencies.

Underwriting battle

Last week, after merging with xAI, SpaceX’s latest valuation reached $1.25 trillion. Assuming the company can raise about $40 billion in funding, based on typical large IPO fee structures, dozens of banks involved in underwriting could share approximately $400 million in fees.

A significant portion of this money will go to the lead underwriters: Morgan Stanley, Bank of America, JPMorgan Chase, and Goldman Sachs. Grimes’s return at this time suggests Morgan Stanley is very likely to take a leading role in SpaceX’s initial public offering.

For a long time, Grimes has been known for “going to great lengths to please clients”: He spent a lot of time playing FarmVille on Facebook to secure the underwriting role in Facebook’s 2012 IPO; during the pursuit of Uber’s IPO, he even personally worked as a rideshare driver in his spare time.

According to insiders, during the Twitter acquisition, Musk’s core demand was to complete the deal quickly. Grimes instructed his team to work in “minutes and hours” rather than days to keep pace with Musk’s rhythm.

In addition to Grimes, Musk has other connections with Morgan Stanley. Musk’s “accountant”—the head of his family office—Jared Birchall, was recruited from Morgan’s private banking division, and xAI’s CFO, Anthony Armstrong, also previously worked at Morgan Stanley.

(Source: Cailian Press)