The City is abuzz with the news that Elon Musk’s SpaceX, the private rocket builder valued at an astronomical $180 billion, has finally filed for what promises to be the largest initial public offering in history. Sources whisper that the company is targeting a valuation north of $250 billion, dwarfing the recent blockbuster listings of Saudi Aramco and Alibaba. But the real story is the battle for domicile: London versus New York.
Musk, never one to shy from controversy, has hinted that the London Stock Exchange is in the running. This would be a coup for the UK, still smarting from the ARM Holdings defection to Nasdaq and the post-Brexit exodus of capital. The Chancellor is reportedly offering tax sweeteners and a regulatory light touch to lure SpaceX across the Atlantic. But don't hold your breath.
The cynic in me says this is classic Musk brinkmanship. He knows the SEC’s disclosure requirements and shareholder lawsuits await in New York. London’s more permissive regime, with its softer stance on dual-class shares and chairman independence, could be a safer harbour. Yet the liquidity is thinner, and the pound is a shadow of its former self. Capital flight has been a persistent haemorrhage; the FTSE 100 has lost its mojo to Nasdaq’s tech boom.
Let’s talk numbers. A $250 billion float would absorb 5% of global IPO proceeds this year. That’s a lot of dry powder. Institutional investors are salivating, but the yield-starved pension funds must weigh the risk. SpaceX has a monopoly on heavy-lift rockets, but its Starlink broadband business is cash-hungry. The company has never turned a profit. Investors are buying a dream, a Mars colony, not a dividend.
Market reaction has been predictably volatile. Gilt yields spiked 10 basis points on the news, as traders priced in a potential flood of new equity issuance. The pound wobbled, caught between the siren song of a London listing and the gravitational pull of dollar-denominated assets. The Bank of England will be watching, but its tools are blunt. The real action is in the secondary market: hedge funds are already positioning for a multi-billion dollar payday.
For the UK Treasury, this is a no-brainer. A SpaceX listing would cement London’s reputation as a tech finance hub, rejuvenate the moribund IPO market, and send a signal that Brexit hasn’t killed the golden goose. But the devil is in the detail. The FCA must balance investor protection with competitiveness. If they bend too far, they risk becoming a regulatory banana republic. If they don’t bend enough, Musk will take his toys to New York.
In the end, it comes down to money. The traditional City institutions are desperate for a win. They’ve lost ARM, failed to attract Deliveroo, and watched as European tech fled to Amsterdam. This is their chance. But Musk is a wild card. He demands control, hates quarterly earnings calls, and treats stock exchange rules as suggestions. Can London swallow its pride and give him what he wants?
My bet? New York will win, but London will extract a consolation prize: a secondary listing, perhaps, or a slice of Starlink. Either way, the market will get its rocket fuel. But investors, beware: this is a high-risk bet, not a gilt-edged security. The bottom line is that SpaceX’s float will reshape capital markets, but whether it’s for better or worse is anyone’s guess.
