A $7 billion horse race: Goldman Sachs and Morgan Stanley battle for ‘lead left’ position ahead of OpenAI and Anthropic IPOs

Goldman Sachs and Morgan Stanley, the two investment banks harboring the biggest market shares by far in tech IPOs, are now battling to lead looming debuts that promise the winners a pair of the richest profit pots in Wall Street history. Goldman already captured a huge prize by clinching the position of “lead left” book runner for the Space X offering scheduled for June 12. Though both banks will play prominent roles in the two trophy deals to come, the one that gets the lead left position on the front page of the S-1 prospectus is placed to garner multiples of the potential rewards that go to its rival listed just to the right, not to mention the probable two-dozen or so banks lower on the list. Of course, the big hedge and mutual funds, as well as insurers, endowments and sundry other institutional investors, are super-hungry to get the biggest possible share allocations for both of these mega-IPOs, just as in the SpaceX deal. It’s been widely reported that both Anthropic and OpenAI have chosen Goldman and Morgan Stanley as their two top book runners, but haven’t determined who’ll get the all-important lead left designation. Hence, “They’ll need to spread their bets by gaining favor with both,” says Jay Ritter, the University of Florida professor who’s world’s top academic expert on IPOs. Why is being the top underwriter so important? Ritter explains that the bank in that position gets to determine how many of the shares go to each fund. Other underwriters share in the fees, and are expected to provide analyst coverage, but do not participate in the share allocation. That’s the power that goes to the lead left banker, the position Goldman occupies in the SpaceX deal. And the way the funds ensure they get the maximum possible allocations, says Ritter, is paying the lead left underwriter lots of “soft dollars.” Those rewards are defined as the amount that the commissions paid on trades exc