Retail investors in a number of European countries are queuing to take part in the much-anticipated SpaceX initial public offering, with the company said to be weighing a substantial allocation to individual buyers. The move has stirred fresh enthusiasm among everyday investors, particularly in Britain, but experts are urging caution given the scale of the valuation and features of the planned deal.
SpaceX is reportedly considering reserving as much as 30% of the offering for retail buyers - an unusually large slice for individual investors - with distribution planned in the UK, Germany, Denmark, France, the Netherlands, Norway, Spain, Sweden and Switzerland. The company is targeting a headline raise of about $75 billion.
In the United Kingdom, eight online investing platforms have started inviting customers to apply for shares linked to the proposed transaction. Market participants say the interest among UK retail investors could make this the most significant mass-market offering in Britain since the 2013 flotation of the then state-owned Royal Mail, and potentially a catalyst for renewed retail engagement in financial markets.
"The retail interest here is unlike any other deal, investors want to be part of the dream," said Ygal El Harrar, BNP Paribas’ global head of equity capital markets, technology.
Despite the heightened enthusiasm, academics and a consumer rights advocate have flagged several reasons for caution. They point to the lofty $1.75 trillion valuation attached to SpaceX, the fact that the company is loss-making and the plan for a relatively small portion of shares to be floated publicly - below 5% - as elements that increase the transaction's risk profile for individual investors.
Additional concerns include the possibility that shares sold to retail buyers may carry limited voting rights. SpaceX did not respond to a request for comment on these matters. Its founder and leader, Elon Musk, said on Thursday that he felt "pretty good" about the company’s revenue projections and that revenue had become "much more predictable".
Retail platforms and demand
The British response has been notable: Hargreaves Lansdown reported that 35,000 of its clients had registered an interest in IPO alerts since rumours of the SpaceX offering began circulating in April. Revolut has created a dedicated UK webpage for the share sale with a full-page video of a SpaceX rocket liftoff and a risk disclosure that applicants may receive no shares at all. eToro published a minimum application amount of $750 on its platform, while Hargreaves Lansdown is asking for £1,000 ($1,334).
Marex Financial has been named as the operator of a public offer platform through which the eight retail platforms can submit prospective investors’ orders. The retail platforms involved include AJ Bell, CMC Markets, eToro, Freetrade, Interactive Brokers and interactive investor, along with other UK platforms that have been inviting customers to apply. Mike Coombes, chief operating officer of British retail investment platform PrimaryBid, said that the approach could establish a precedent for other non-UK companies looking to include UK retail buyers early in their offerings.
An executive at one of the participating retail platforms said it was encouraging that everyday investors were getting access before shares begin trading in the secondary market, rather than being limited to buying after the IPO.