Will the planets align for SpaceX's US$50bn IPO?
A possible IPO for SpaceX is the deal on everybody's lips, and unsurprisingly so, considering the aerospace company combines one of the most controversial CEOs in Elon Musk, an interplanetary ambition to put humans on Mars and a prospective valuation of US$1.5trn that would make for the largest listing ever.
Banks have yet to be mandated but the company is reportedly targeting a listing in June with a potential deal size of US$50bn.
Goldman Sachs and Morgan Stanley are expected to take leading roles on the offering alongside JP Morgan and Bank of America. One banker close to the situation said that lineup was "not incorrect".
SpaceX interviewed the four banks in December about the IPO, according to a banker outside the group.
Officials at Goldman, Morgan Stanley and JP Morgan declined to comment. Bank of America and SpaceX did not respond to a request to comment.
The Financial Times reported on Wednesday the offer size, valuation and plans to launch the offering in June, around the time of a conjunction of Jupiter and Venus (on June 9) and Musk’s birthday (June 28).
Galactic demand
The US$29.4bn IPO of Saudi Aramco is the largest to date and yet bankers are confident that SpaceX could find the demand to smash that record – even if the timeline is madly ambitious.
“Everyone is going to show up,” said the co-head of ECM at one bank not currently involved in the IPO. “What will be interesting is the extent of international participation that will be allowed on the IPO, given the US defence overlay of the business.”
A US$50bn IPO is certainly doable, said another senior ECM banker. "It’s coming in the deepest, most liquid capital market in the world and has a proven track record in raising vast amounts of capital at ever-increasing prices," he said.
"I’m sure it will be an extremely noisy IPO. It will not need to attract cash from outside of the US as some of the order books for recent IPOs such as Medline have been enormous so I don’t think that will be an issue – assuming it's not completely crazy on price. There will certainly be large pockets of international interest wanting to participate."
Medline attracted an order book of more than US$70bn for its IPO in December. While nominally large, SpaceX would be floating only about 3% of the company in the offering at the US$50bn size and US$1.5trn valuation, leaving Musk in control. Heavy trading by retail investors is inevitable so liquidity is not expected to be an issue.
It will be one of the more unusual equity stories in public markets. The core rocket and satellite business is compelling, with the uprising in Iran illustrating the power of its go-anywhere Starlink space-based internet platform, but that is combined with an enormously costly and mind-boggling ambition to occupy Mars.
In other extremely ambitious tech IPO news, The Wall Street Journal reported that OpenAI is targeting an IPO by the fourth quarter in an effort to get ahead of rival Anthropic's listing plans. Both companies have held discussions with bankers pitching for their deals, WSJ reported.