SpaceX pulled off the largest initial public offering ever, but turmoil is growing after Mirae Asset Securities, the only firm in Korea to join the underwriting syndicate, was not allotted a single share. In particular, with Japan securing far more shares than initially allocated, some are raising concerns about a "Korea passing."
According to the financial investment industry on the 15th, during the SpaceX IPO allocation on the 12th (local time), lead underwriter Goldman Sachs sent an email to Mirae Asset Securities saying there would be "no allocation for retail investors." As a result, Mirae Asset Securities received none of the 2.31 million shares it had planned to underwrite (worth $312 million at the offer price).
Mirae Asset Securities is trying to determine why Goldman Sachs abruptly canceled the allocation. The documents SpaceX filed with the U.S. Securities and Exchange Commission (SEC) had indicated an allocation to Mirae Asset Securities for 2.31 million underwritten shares. However, Goldman Sachs did not allocate shares in the final stage without a detailed explanation.
Industry watchers say confusion was exacerbated by differences between Korea's retail IPO subscription practices and the U.S. IPO allocation process. In Korea, allocations follow certain criteria, but in the United States, the lead underwriter's discretion, institutional demand, the issuer relationship, and whether the investor is long term influence allotments. The prospectus reportedly also included a clause stating that "the underwriting syndicate's allotment may be adjusted at the lead underwriter's discretion."
The industry believes Goldman Sachs effectively cut the Korea subscription tranche as global institutional demand for the offering surged. According to Bloomberg and Reuters, orders from global institutions and U.S. retail investors to participate in SpaceX's IPO on the listing day exceeded $100 billion (about 150 trillion won). That surpasses the $75 billion offering size.
By contrast, domestic demand was relatively limited. Mirae Asset Securities initially aimed to underwrite 2.31 million shares, but the retail offering for Korean investors fell through due to a securities registration filing issue, and the amount raised through a private placement stayed around $500 million (about 760 billion won), leaving it at a disadvantage in the underwriting competition.
Japan, unlike Korea, was able to proceed with a retail IPO subscription first, driven by red-hot demand. According to the Financial Services Agency of Japan, Japanese investors placed $6.2 billion (about 9.36 trillion won) in orders during the SpaceX IPO subscription. Mizuho Securities, the Japan subscription manager, was initially allocated $312 million, but amid a high 20-to-1 competition ratio, it ultimately received $2.2 billion (about 3.3 trillion won), more than seven times the initial amount.
In the end, because Mirae Asset Securities failed to secure IPO shares, professional investors who joined the private placement will be refunded their IPO funds. Mirae Asset Securities said it had notified investors in advance of the possibility of a refund given the uncertainty around the allocation.
The financial authorities also moved to assess the situation. The Financial Supervisory Service is checking whether Mirae Asset Securities sufficiently warned in advance about the possibility of not receiving an allocation, and whether there was any exaggeration in investor guidance and marketing.