SpaceX’s public offering could make Musk a trillionaire
SpaceX has upset the long-standing Wall Street price discovery apparatus by publicly pricing shares at $US135 ($A189) in its initial public offering, underlining Elon Musk’s determination to raise record sums of his own.
The company’s decision to release a price a week ahead of its landmark IPO on Wednesday has few precedents among major U.S. IPOs and reflects Musk’s position in the financial world as an adventurer with a golden touch.
SpaceX’s amended IPO filing confirms a Reuters report earlier this week of its $US135 ($A189) price. The company aims to raise US$75 billion (US$A105 billion), the highest ever for an IPO, in a deal that would value it at US$1.75 trillion (US$A2.45 trillion), placing it among the 10 most valuable US-listed companies.
The company will launch an investor roadshow on Thursday, with pricing expected on June 11. Trading in the shares will begin the next day on Nasdaq.
Musk has rewritten the IPO playbook for SpaceX in many other ways, from planning to give retail investors a larger role in allocations to pushing for early index participation and structuring governance that will preserve strong founder control.
“Nothing about this IPO is normal by any means, but it’s still the largest IPO in history, so perhaps that’s not surprising,” said one investor planning to participate in the IPO.
A roadshow is where companies and bankers typically brief investors to arrive at a price range for share sales. The process emphasizes bankers’ relationships with potential investors and their market understanding of upcoming offerings.
Following a series of test meetings with investors ahead of the roadshow, SpaceX said it was looking for a valuation of around US$1.75 trillion (A$A2.45 trillion), while some investors were looking for US$1.5 trillion (A$A2.1 trillion) or less.
The company’s plans, including the size of the raise, could change as the next round of investor meetings begins, sources told Reuters.
There is a rush on Wall Street to get a piece of the deal, given Musk’s reputation and control over a bid that would generate millions of dollars in fees.
The potential investor said there was a feeling that big companies were “posturing” by saying “we invested the money early”; It’s a position that both reflects and reaffirms Musk’s influence with investors.
Other aspects of SpaceX’s proposal stand out. Major international banks such as Mizuho, Deutsche Bank, UBS and Barclays have been called on to focus on lining up wealthy retail buyers in their home countries.
In the past, little attention was paid to individual investors as bankers received feedback from large asset managers such as Fidelity Investments and powerful hedge funds such as Citadel.
Reuters had previously reported that the company was considering allocating 30 percent of the offering to retail investors; It’s an unusually large retail slice aimed at reaching Musk’s cult-like following, who would also expand his ownership of the company.
