BlackRock has discussed investing between $5 billion and $10 billion in the upcoming initial public offering (IPO) of SpaceX next month, according to informed sources. This substantial investment would correspond to an IPO fundraising target of up to $75 billion, representing a significant vote of confidence from the world's largest asset manager in Elon Musk's company.
The potential investment highlights the close relationship between Musk and BlackRock CEO Larry Fink. It also reflects a growing consensus on Wall Street that the market will participate in what could be the largest IPO in history, despite SpaceX pursuing an exceptionally high valuation and plans to grant investors minimal power to challenge management decisions.
A large-scale investment from BlackRock would provide SpaceX with a cornerstone investor and help secure support from other major institutions. Commitments of this magnitude are rare; banking data shows that over the past 25 years, there have been fewer than 12 instances where an investor put $1 billion or more into a single IPO. However, sources close to the deal indicate that the unprecedented scale of SpaceX's IPO necessitates multiple investment firms each committing billions of dollars.
For BlackRock, this move may represent an effort to catch up. According to public filings from mutual funds, BlackRock already holds a non-public investment in SpaceX, currently valued at a minimum of $300 million. However, this stake is significantly smaller than the established holdings of other major public investors like Fidelity, Baillie Gifford, and Franklin Templeton.
The final investment amount could be adjusted based on SpaceX's IPO pricing and other pre-transaction factors. Sources close to the deal expect SpaceX to commence its formal global roadshow in early June.
During the IPO preparation period, Fink has grown increasingly supportive of Musk. Earlier this year, he interviewed Musk on stage at the World Economic Forum in Davos and praised the investment returns from Tesla, in which BlackRock holds a substantial stake. Fink remarked, "Imagine if many pension funds had invested in Elon at Tesla's IPO and stayed with him, the returns those pension funds would have gotten."
Fink concluded the interview by stating, "There's a lot of misunderstanding about Elon Musk. I can tell you, he's a great friend, and I always learn a lot from him. I'm inspired by his vision of the future, which I don't think is a bad future, and I share his optimism."
SpaceX has been actively courting large investors. Last month, the company organized a two-day tour for investors to its Starbase launch facility in southernmost Texas and its xAI data center in Memphis. Major institutions on the tour included mutual fund giants such as BlackRock, T. Rowe Price, Capital Group, and Fidelity Investments, according to investors who attended.
"The consensus among the bulls is: 'You never lose money betting with Elon,'" said an investor from an asset management firm who was on the trip.
The IPO will significantly test investors' trust in Musk. SpaceX is expected to go public at a valuation that represents an extremely high multiple of its sales, while its key artificial intelligence strategy remains in flux. Core AI researchers have departed, and the growth of its core space business heavily depends on a fully reusable mega-rocket that is still in the testing phase.
Investors are drawn to SpaceX primarily due to its commanding lead over competitors in rocket launches and its promise to leverage this advantage to launch more profitable payloads, such as advanced chips that power AI models, into space.
Simultaneously, SpaceX plans to clearly warn investors that shareholders will have almost no say in corporate governance and limited legal recourse. A review of a confidential summary of the IPO prospectus indicates that a "mandatory arbitration clause" will restrict shareholders' legal rights. It has also been reported that SpaceX plans to concentrate voting power with Musk, who will hold a special class of shares granting him 10 votes per share.
BlackRock would fund the investment in SpaceX from its $536 billion actively managed funds. The final transaction amount will depend on the overall IPO size and the offering price.
Comments