Record SpaceX IPO set to deliver billions for Gulf investors

• $75bn nearly triple Aramco
• Musk’s company worth $1.8trn
• Bellwether for AI-era valuations

Gulf investors stand to book billions of dollars in paper gains after Elon Musk’s SpaceX completed the largest initial public offering in history at a valuation of about $1.8 trillion.

The $75 billion flotation, which is due to start trading on Friday, nearly triples the $26 billion raised by oil giant Saudi Aramco in 2019. The share performance of the rocket and satellite maker over the coming days and weeks will test whether markets are willing to back AI-linked companies at extraordinary valuations.

Orders have exceeded $250 billion as Arab sovereign wealth funds, family offices and asset managers scrambled for shares ahead of its launch. Individual investors, which are expected to receive an unusually large part of the offering, placed orders of more than $100 billion, the Financial Times reported.

For Gulf state investors, the potential rewards are substantial.

Saudi Arabia’s Public Investment Fund (PIF) and the Kuwait Investment Authority have each placed orders worth between $1 billion and $5 billion, according to Bloomberg, with the $580 billion Qatar Investment Authority also said to have taken a significant position.

Shares in Saudi Arabia’s Kingdom Holding Company surged to a 10-year high this month after the company disclosed that its combined 0.63 percent stake with chairman Prince Alwaleed bin Talal could be worth more than $10 billion at a valuation of $1.7 trillion.

Humain, an AI company backed by the PIF, invested $3 billion into Musk’s xAI earlier this year before the company merged into SpaceX. The fund subsequently said its holdings were converted into SpaceX equity.

PIF also held discussions over a potential $5 billion anchor investment in the flotation in April, although neither side publicly confirmed the talks.

Writing for AGBI, Matein Khalid, a board adviser to leading family offices in the UAE and Saudi Arabia, said: “The SpaceX IPO will generate a 50-times financial windfall for a constellation of GCC sovereign funds and family offices who embraced the awesome early potential of Musk’s science fiction – and even surreal – vision of space travel, satellite internet and the first human colony on Mars.

“I expect SpaceX will have a seismic impact on GCC finance, rocket launch technology, robotics, maritime and aviation communications and even national security in an age of drone warfare.”

Gulf state investors continue to increase their exposure to artificial intelligence, data centres and digital infrastructure despite concerns over valuations across the sector.

SpaceX is valued at 94 times revenue despite reporting a loss last year, making it one of the most richly valued companies ever to come to market.

Much of its valuation rests on expectations for future businesses, including AI infrastructure in space and Musk’s plans to land a human settlement on Mars.

When SpaceX made its IPO public filing last month, the company disclosed that AI-related activities accounted for about 60 percent of capital spending last year – xAI accelerated investment in chips, data centres and wider infrastructure.

For Gulf state investors, many of whom have spent the past two years building substantial positions across the AI ecosystem, SpaceX’s debut will offer an indication of how public markets value the next generation of AI champions.

Further reading:

• The Gulf’s SpaceX gamble is about to deliver in stratospheric fashion
• SpaceX gives Prince Alwaleed’s Kingdom stock a rocket
• Gulf funds balance SpaceX potential against AI cash burn

The significance of the IPO extends far beyond SpaceX as investors look ahead to listings by AI companies including ChatGPT developer OpenAI and Claude maker Anthropic later this year.

A strong debut could reinforce confidence that the stock market is willing to support the astronomical valuations attached to leading AI companies. A disappointing performance would raise questions about whether investors are pushing back against assumptions underpinning the AI boom.

SpaceX will become eligible for inclusion in the Nasdaq 100 soon after listing, creating an additional source of demand from passive investment funds. Despite opening the company to public shareholders, voting control will largely remain concentrated with Musk, limiting the influence of outside investors.