SpaceX is reportedly driving a hard bargain with financial institutions ahead of what could become the largest IPO in history — even as bankers stand to pocket a sweet half-billion-dollar payday.
Elon Musk’s space and artificial intelligence conglomerate is negotiating to pay less than 0.75% in underwriting fees on the roughly $75 billion it plans to raise in a blockbuster public offering expected this month, according to Bloomberg News.
The cut-rate fee would be a fraction of the 4% to 7% typically charged on smaller IPOs and below the more than 1% that investment banks usually collect on gigantic public offerings, Bloomberg noted.
Yet the out-of-this-world offering is so big that Wall Street banks could still split about $500 million in fees among themselves.
Meanwhile, as SpaceX executives haggle with Wall Street over IPO fees, rank-and-file employees are mounting their own negotiations — banding together to secure discounted wealth-management services and sophisticated tax strategies ahead of what could be the biggest IPO windfall in history, Bloomberg reported.
The deal is being led by Goldman Sachs and Morgan Stanley, which are expected to collect a larger share of the fee pool than the other 21 firms participating in the syndicate, according to the outlet.
The Post has sought comment from SpaceX, Goldman and Morgan Stanley.
The prospect of what could become the largest IPO in history appears to be giving Musk unusual leverage over Wall Street.
SpaceX is targeting a valuation of about $1.8 trillion, according to reports.
If successful, the company’s planned $75 billion fundraising would shatter previous IPO records and instantly become one of the largest capital raises ever attempted in public markets.
The fee talks also show how fiercely banks compete for high-profile deals, even if it means accepting lower profits margins.
In 2010, Wall Street firms agreed to a 0.75% fee to handle General Motors’ return to public markets after the automaker’s government-backed restructuring.
At the time, banks faced intense scrutiny over compensation following the financial crisis.
Alibaba’s 2014 IPO, which raised $25 billion, generated about $300 million in underwriting fees — coming to about 1.2% of the Chinese tech giant’s gross proceeds.
The SpaceX offering comes as a wave of AI-linked companies prepare to test investor appetite.
Anthropic confidentially submitted paperwork for a public offering on Monday, while OpenAI is also laying the groundwork for its stock-market debut.
The timing has raised concerns that multiple mega-deals all happening around the same time could strain demand, forcing banks and investors to absorb tens of billions of dollars in new equity in a compressed period.
SpaceX, which began as a launch provider that has transformed into a sprawling conglomerate spanning rockets, satellite broadband and artificial intelligence, appears to occupy a category of its own.
Its Starlink business has emerged as the company’s primary profit engine, while SpaceX’s launch operations continue to dominate the global commercial space market.
SpaceX was valued at more than $175 billion in late 2023 before surging to about $800 billion in a December insider share sale.
More recent private-market valuations have climbed above $1.5 trillion.
The offering could deliver an eye-popping boost to Musk’s personal fortune.
Based on widely reported estimates that he owns about 40% to 45% of SpaceX, a public-market valuation in the $1.5 trillion to $1.8 trillion range would make his stake worth hundreds of billions of dollars on paper.
At a $1.75 trillion valuation, Musk’s holdings could be worth well north of $700 billion, cementing his status as the world’s richest person.
As of Tuesday, his net worth was listed on the Bloomberg Billionaires Index at a record $721 billion — meaning the SpaceX IPO could push his wealth above an unprecedented $1 trillion.
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