Elon Musk is discussing the possibility of allocating up to 30% of SpaceX’s initial public offering to individual investors, according to news agency Reuters, which cited a person familiar with the matter. This allocation would be at least three times larger than typical retail portions in IPOs.
The structure, of what is expected to be one of the biggest IPOs in history, departs from the Wall Street standard and highlights Musk’s determination to shape both SpaceX’s shareholding composition and the way the shares will be traded after the IPO, according to people close to the structure, who asked not to be identified because the process is confidential.
Musk’s plan, communicated to Wall Street by Chief Financial Officer Bret Johnsen, combines such an allocation to retail with an atypical approach to choosing investment banks, the sources said. SpaceX is assigning some companies well-defined roles based on personal relationships and past ties, they added, warning that the plan is not definitive and may change.
As part of the effort, Musk chose Bank of America to focus on domestic retail distribution, according to four people familiar with the matter.
Musk’s companies have long attracted a loyal following among non-institutional investors, a dynamic that SpaceX seeks to capitalize on as it prepares for a stock market debut with a valuation that could reach $1.75 trillion.
Demand from retail investors expected to be strong
Demand from retail investors is expected to be strong, ranging from offices that have supported SpaceX for years to smaller investors attracted to Musk’s companies, the sources said.
“This is one of those once-in-a-lifetime moments where people just say they have to get in,” said Rowan Taylor, managing partner at Liberty Hall Capital Partners, a private equity firm focused on aerospace and defense. The company is not involved in the IPO.
“The appetite is a demonstration of investors’ confidence in Elon Musk”, he highlighted.
SpaceX is betting that these investors — many of whom have followed the company for years in the private market — are less likely to dump shares immediately after the IPO or carry out quick sales operations, the sources commented.
In initial public offerings (IPOs), companies typically allocate a maximum of 5% to 10% of shares to retail investors. Technology news site The Information had previously reported that the allocation for individual investors could exceed 20%, with roles defined for banks.
SpaceX has designated banks for specific investor groups and geographic regions.
Morgan Stanley is expected to serve smaller investment volume retail investors, among others, through the E*Trade platform. Bank of America is focused on high-net-worth individuals and family offices in the U.S., while UBS will market the products to these investors internationally, according to the sources.
Citi is coordinating international distribution for retail and institutional investors, working with banks with regional expertise to help sell shares to individual investors abroad, the sources said.
Other banks have also been assigned regional roles: Mizuho covers Japan, Barclays handles the United Kingdom, Deutsche Bank Germany and Royal Bank of Canada Canada, according to the sources.
SpaceX has not yet defined the size or timeline of the offering.
