NEW YORK CITY, New York: Morgan Stanley has emerged as a front-runner for a top underwriting role in SpaceX's highly anticipated initial public offering, buoyed by its long-standing relationship with CEO Elon Musk, according to people familiar with the matter.

A competitive selection process, known as a "bake-off," is still ongoing, with Morgan Stanley, Goldman Sachs, and JPMorgan among a small group of banks vying for positions on the deal, four sources said. While Morgan Stanley is widely viewed as the leading contender, no final decisions have been made, and there is no guarantee it will secure the coveted "lead left" role.

Musk's ties to Morgan Stanley stretch back more than 15 years, making the bank a natural favorite to lead the underwriting syndicate, three of the people said. However, discussions remain fluid and confidential. The sources spoke on condition of anonymity. Morgan Stanley, Goldman Sachs, and JPMorgan declined to comment, while SpaceX did not respond to a request for comment.

A decision on the lead banks could come before the end of the year, with the whole underwriting syndicate likely to be finalized afterward, two people said. Still, the sources cautioned that SpaceX's IPO plans remain dependent on market conditions and could be delayed or scrapped entirely.

Morgan Stanley was among the banks that took Tesla public in 2010, alongside Goldman Sachs, JPMorgan, and Deutsche Bank, with Goldman acting as the lead. The bank later advised Musk on multiple transactions, including leading the financing for his 2022 acquisition of Twitter, now known as X.

Musk recently appointed Anthony Armstrong, a Morgan Stanley banker involved in the Twitter deal, as chief financial officer of his artificial intelligence venture, xAI. Another former Morgan Stanley banker, Jared Birchall, runs Musk's family office, Excession, which manages his personal assets.

In a staff memo sent last week, SpaceX Chief Financial Officer Bret Johnsen told employees the company was preparing for a potential public offering in 2026.

"Whether it actually happens, when it happens, and at what valuation are still highly uncertain, but the thinking is that if we execute brilliantly and the markets cooperate, a public offering could raise a significant amount of capital," Johnsen wrote.

It has previously been reported that SpaceX is seeking to raise more than US$25 billion in an IPO that could take place next year, potentially making it one of the most extensive public listings ever. The prospect of SpaceX going public surprised some, given Musk's long preference for keeping the company private.

People familiar with Musk's thinking said SpaceX's soaring valuation and the success of its Starlink satellite internet business have driven a reassessment.

SpaceX has grown from a dominant rocket launch provider into the world's largest satellite operator, with nearly 10,000 Starlink satellites delivering broadband internet to consumers, governments, and businesses. While Starlink had previously been considered a candidate for a standalone IPO, the current plan could include both Starlink and the launch business, though details remain subject to change.

Johnsen said proceeds from an IPO would help fund a higher flight rate for SpaceX's next-generation Starship rocket, deploy AI data centers in space linked to Starlink, and build "Moonbase Alpha," a lunar base Musk has discussed publicly.

SpaceX is a key contractor for NASA's Artemis moon program, holding a $4 billion contract to land astronauts using Starship. Musk's long-term vision of sending humans to Mars also hinges on Starship's development, with Starlink revenues playing a crucial role in funding those ambitions.

Starlink remains SpaceX's primary revenue driver, and the company is expanding into wireless services with Starlink Mobile, which it trademarked in October.