Elon Musk's "designated" investment banker is "in position," preparing for the world's largest IPO

According to a report by The Wall Street Journal on Monday, Morgan Stanley senior investment banker Michael Grimes announced his return to Wall Street this week, where he will lead SpaceX's initial public offering (IPO) as the chairman of investment banking—potentially the largest IPO in history. The banker, who previously helped Elon Musk take Tesla public, left Morgan Stanley last year to join the Department of Commerce, but has chosen to return as SpaceX's IPO window opens.

Morgan Stanley announced in an internal memo on Monday that Grimes would return to the firm, promoted from his previous role as head of global technology investment banking to chairman of investment banking. The timing is critical—SpaceX's valuation soared to $1.25 trillion after merging with Musk's artificial intelligence startup xAI last week.

SpaceX is expected to raise tens of billions of dollars through the IPO to fund data center construction in space and lunar colonization plans. According to sources close to the company, if the fundraising reaches $40 billion, the more than ten banks participating in the underwriting are expected to share about $400 million in underwriting fees. Morgan Stanley, Bank of America, JP Morgan, and Goldman Sachs are expected to serve as the four lead underwriters, receiving the largest share.

Grimes's return means he will have the opportunity to share in this potential windfall rather than remain in the government watching the feast from the sidelines.

Building a Strong Connection with Musk

Grimes has worked at Morgan Stanley for nearly thirty years and has built a strong connection with Musk. According to a SpaceX investor who knows both men, Grimes is one of the few bankers "tolerated" by the unpredictable entrepreneur.

Musk's relationship with Morgan Stanley is deep-rooted. His wealth manager Jared Birchall and xAI CFO Anthony Armstrong both come from the firm. Grimes himself helped Musk take Tesla public in 2010 and assisted in the acquisition of Twitter in 2022.

In the Twitter acquisition, Musk demanded a rapid pace. According to insiders, Grimes instructed his team to work in "minutes and hours" rather than days to keep up with Musk's rhythm. Text messages revealed in the legal proceedings of the Twitter acquisition show the rapport between the two. In one message, Grimes proposed helping Musk secure $5 billion in financing from then-cryptocurrency whiz Sam Bankman-Fried, calling him "a super genius and doer like you."

Grimes is known on Wall Street for his extreme client development methods. To win the underwriting role for Facebook's 2012 IPO, he spent hours playing the social platform's game FarmVille. To secure the lead underwriting role for Uber's 2018 IPO, he even worked part-time as an Uber driver.

Washington Interlude and Timing of Return

Grimes left Morgan Stanley a year ago when Musk was launching the Department of Government Efficiency (DOGE). He served as head of the Commerce Department's Investment Accelerator, commuting between Washington and his home in the San Francisco suburbs. This career shift surprised fellow bankers, who did not perceive him as particularly partisan Even after Musk left Washington six months later, Grimes remained in the position, reporting to Secretary of Commerce Howard Lutnick. His responsibilities included leading President Trump's "Invest in America" initiative, helping the government secure a deal to acquire a 10% stake in Intel, and advising on the potential IPO plans for Fannie Mae and Freddie Mac.

During Grimes' tenure in government, the U.S. IPO market was relatively sluggish, with few large tech companies going public. However, this year is expected to be the best year for the IPO market in history, with OpenAI and Anthropic also considering large-scale IPOs.

According to The Wall Street Journal, many on Wall Street have been speculating whether Grimes would be satisfied staying in the government sector and forgoing this potential massive windfall. The answer is now revealed