Demand far outstrips supply
People familiar with the matter say institutional orders for SpaceX's initial public offering are several times larger than the number of shares being offered. Banks overseeing the IPO informed investors early Tuesday that meetings with company management had spurred additional demand, according to those people who requested anonymity because the information is not public.
Sources said the volume of orders rose since Monday, when banks initially indicated the offering was already well oversubscribed. The bankers also signaled that allocations within the institutional tranche are expected to prioritize large long-only investment management firms, one of the people said. Several institutional investors reportedly submitted orders for roughly $10 billion or more apiece.
Deal specifics and timing
SpaceX is proposing to sell 555.6 million shares at a fixed price of $135 each, which produces an implied company valuation of about $1.8 trillion. The offering is intended to raise roughly $75 billion, a total that would exceed the previous IPO fundraising high of $29.4 billion set by Saudi Aramco in 2019.
Shares are slated to trade on Nasdaq and Nasdaq Texas under the symbol SPCX. Institutional order books are scheduled to close at 4:00 p.m. in New York on Wednesday, while retail investors will have a slightly extended window on certain brokerage platforms. The IPO is scheduled to price on June 11, with public trading planned to begin on June 12.
Investor outreach
Company executives, including President Gwynne Shotwell and Chief Financial Officer Bret Johnsen, have been conducting meetings with hundreds of institutional investors. Those sessions are being hosted by lead banks on the deal, which include Morgan Stanley and Goldman Sachs, according to people familiar with the process.
The banks managing the IPO have communicated to investors that the institutional allocation will favor large, long-only managers. That approach follows the strong demand the banks reported as the bookbuilding process progressed into the week.
Market implications and next steps
The extraordinary level of institutional interest means bookrunners must determine final allocations among competing large orders before the books close. The timeline set by the managers of the offering points to a pricing decision on June 11 and the start of public trading on June 12, with the institutional book closing the day prior.