BlackRock has discussed investing $5 billion to $10 billion in SpaceX's initial public offering (IPO) next month, according to people familiar with the matter. This huge investment corresponds to an IPO fundraising scale of up to US$75 billion, which will represent an important vote of confidence for Musk's companies from the world's largest asset management company.
The investment would highlight Musk's close relationship with BlackRock CEO Larry Fink. The investment also reflects a growing consensus on Wall Street that the market will still participate in the largest IPO in history, despite SpaceX's pursuit of ultra-high valuations and plans to give investors little power to challenge management decisions.
BlackRock's large investment would give SpaceX an anchor investor and help secure support from other large institutions. Investment commitments of this scale are rare: Investment bank data shows that in the past 25 years, there have been fewer than 12 cases where investors invested $1 billion or more in a single IPO. However, according to sources close to the transaction, SpaceX’s IPO is unprecedented in scale and requires billions of dollars in investment from multiple investment institutions.
BlackRock, for its part, may feel it needs to play catch-up. According to mutual fund public filings, BlackRock has made a non-public investment in SpaceX and its current stake is worth at least $300 million. But BlackRock's holdings are much smaller than those already established by large public investors such as Fidelity, Baillie Gifford and Franklin Templeton.
Its final investment amount may be adjusted based on SpaceX IPO pricing and other pre-transaction factors. People close to the deal said SpaceX expects to launch a formal global roadshow in early June.
During the preparations for the IPO, Fink became increasingly close to Musk. At the beginning of this year, he interviewed Musk on the stage of the Davos Forum and praised Tesla's return on investment - BlackRock holds a large stake in Tesla. "Imagine if many pension funds invested in Elon when Tesla went public, the pension funds that invested alongside him would have received huge returns," Fink said.
Fink said at the end of the interview: "There are so many misunderstandings about Musk. I can tell you that he is a great friend and I can always learn a lot from him. I am deeply inspired by his vision of the future. I don't think it is a bad future, and I share his optimism."
SpaceX has been aggressively courting large investors. Last month, the company organized a two-day tour, inviting investors to the Starport launch base in the southernmost tip of Texas and the xAI data center in Memphis. Large institutions participating in the inspection include mutual fund giants such as BlackRock, T. Rowe Price, Capital Group and Fidelity Investments, according to accompanying investors.
“The consensus among the bullish camp is: ‘Bet with Elon and you will never lose money.’” said an accompanying investor from an asset management company.
This IPO will greatly test investors' trust in Musk. SpaceX will be valued at a very high multiple of sales when it goes public, and its key artificial intelligence strategy remains in flux. Core AI researchers have left one after another, and the growth of its aerospace business relies heavily on a giant fully recyclable rocket that is still in the testing phase.
Investors are attracted to SpaceX primarily because it is far ahead of its competitors in rocket launches and promises to use that advantage to send more profitable payloads, such as advanced chips that can drive AI models, into space.
At the same time, SpaceX plans to make it clear to investors that shareholders will have little say in corporate governance and limited legal recourse. A review of the company's confidential IPO prospectus summary shows that the "mandatory arbitration clause" will limit the legal rights of shareholders. The media also previously reported that SpaceX plans to concentrate voting rights in Musk's hands - he will hold a special class of shares with 10 voting rights per share.
BlackRock will invest in SpaceX from its $536 billion actively managed funds. The final amount of the transaction will depend on the overall IPO size and issue price.