The allocation of SpaceX IPO shares to domestic individual investors that Mirae Asset Securities had been pursuing appears to have effectively fallen through. Critics say the firm stoked expectations with excessive marketing without securing any shares to allocate to retail investors.
According to the financial investment industry on the 4th, the domestic retail subscription for SpaceX's IPO through Mirae Asset Securities has effectively become impossible. For a domestic offering of SpaceX shares, a securities registration statement must be filed at least 15 trading days before the listing date, but no such filing has been made to date. SpaceX is slated to list on the 12th.
SpaceX is currently preparing for the largest initial public offering (IPO) on record. The company plans to raise about $7.5 billion (about 112 trillion won) through this IPO, and its valuation at listing is estimated to reach up to $1.75 trillion (about 2,662 trillion won). Mirae Asset Securities is participating as one of more than 20 global investment banks (IBs) in the IPO. Mirae Asset Securities has reportedly expressed a strong intention to underwrite, aiming to secure more than $1 billion (about 1.5 trillion won).
The lack of a securities registration filing is said to stem from the absence of an IPO share allocation. SpaceX filed an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) on the 20th of last month, but no allocation of IPO shares to the underwriting syndicate has been made so far. Without a confirmed allocation, it is impossible to prepare a securities registration statement for a domestic offering.
If Mirae Asset Securities secures an underwriting allotment going forward, it is expected to sell the shares to professional and institutional investors via a private placement subscription. Although the IPO allocation has not yet been finalized, a private placement subscription for professional investors is said to be possible. In an amended S-1 filed by SpaceX on the 1st, the method of offering shares to Korean investors was limited to private placement.
Accordingly, Mirae Asset Securities will conduct a private placement subscription from the 5th to the 8th for individuals and corporate professional investors registered as professional investors. The minimum investment is $100,000, and applications can be made for up to $3 million. The final number of shares allocated to each investor is scheduled to be confirmed on the expected listing date, the 12th.
As a result, with Mirae Asset Securities unable to allocate SpaceX's IPO shares to domestic investors, the company is facing criticism for engaging in excessive marketing. Financial authorities previously issued a verbal warning to Mirae Asset Securities, noting that the ongoing disclosure of the offering process to the public—when neither the allocation nor even the eligibility of domestic investors to subscribe had been determined—could amount to de facto "indirect marketing."
Some note that, after mentioning the possibility of a public offering but effectively pursuing only a private sale, the situation recalls the controversy over Vietnam asset-backed securities (ABS). In July 2016, Mirae Asset Securities heavily promoted that it would take the "72 Building," a Vietnam landmark, public via asset-backed securities (ABS), but in practice created 15 special purpose companies (SPCs) and attracted investors (fewer than 49) through a private placement. Financial authorities at the time viewed it as an attempt to circumvent public offering regulations by using a private placement despite it being effectively a public offering and imposed the maximum penalty surcharge of 2 billion won.