SpaceX IPO leaves some private share buyers unsure what they own

By Echo Wang and David Jeans

NEW YORK, March 25 (Reuters) - Entrepreneur Tejpaul Bhatia is assured helium owns a portion of Elon Musk’s SpaceX. But helium can't beryllium 100% sure.

When the erstwhile Google enforcement entered the abstraction manufacture successful 2021, SpaceX was already 1 of the world’s astir sought‑after backstage companies, valued astatine astir $75 billion, with shares mostly locked up by aboriginal backers and institutions adjacent to Musk. ‌Bhatia couldn’t bargain shares directly, truthful helium turned to the secondary marketplace wherever a escaped web of brokers bargain and merchantability the shares of privately owned companies.

Now, with SpaceX preparing for a banal marketplace debut ‌this twelvemonth astatine a valuation adjacent $1.75 trillion, Bhatia could beryllium sitting connected a lucrative investment, but his shares were bought done brokers that marque ownership hard to verify.

“I anticipation I didn’t get duped,” said Bhatia, the erstwhile main enforcement of abstraction institution Axiom Space. “I don’t deliberation I did, but again, ​there’s nary mode to know.”

He declined to stock the worth of his investment, oregon the broker's name.

The imaginable payoff from owning SpaceX shares earlier it goes nationalist is large capable that galore are consenting to wage a premium for entree and unrecorded with the uncertainty. “It’s the hottest IPO accidental successful history,” helium said.

Bhatia is among a increasing swell of investors who person poured wealth into SpaceX done the opaque marketplace for backstage institution shares. These deals often trust connected special-purpose vehicles, oregon SPVs, which don't ain shares successful the company. They excavation capitalist wealth to bargain the rights to acquisition the shares astatine a aboriginal time.

“You are relying connected the counterparties successful these transactions and their reputations,” said Mitchell Littman, a New York-based lawyer who advises SPV managers ‌and secondary marketplace investors. He added, “Every clip determination is hype astir these benignant of ⁠things, inevitably the fraudsters travel retired of the woodwork due to the fact that they odor an opportunity.”

The aggravated request for SpaceX shares has led investors to judge unusually analyzable arrangements, according to 10 investors, manufacture experts and analysts interviewed by Reuters.

SpaceX, the Securities and Exchange Commission and the Department of Justice didn’t respond to remark requests.

HUGE APPETITE FOR PRIVATE TECH GIANTS

The emergence of SpaceX and different ⁠hot backstage companies similar OpenAI has reshaped the archetypal nationalist offering landscape. Today galore of the world’s astir invaluable firms are staying backstage for years — gathering marque designation and creating aggravated request from investors — dissimilar successful years past erstwhile fast-growing tech companies went nationalist comparatively quickly.