Elon Musk's SpaceX has finally launched what is called the biggest IPO ever. The company put up $135 a share, raising about $75 billion, and it’s worth nearly $1.75 trillion in terms of market value - the most valuable publicly traded company in the world. The company will be listed on the Nasdaq under the ticker symbol "SPCX."
When the IPO is so popular, India’s investors are asking a simple question: Can Indians invest in the SpaceX IPO? The answer is yes, but it’s much more difficult than going through an IPO in India.
Can Indian investors apply for the SpaceX IPO?
Indian residents are legally allowed to invest in overseas securities, including IPOs, through the Reserve Bank of India's Liberalised Remittance Scheme (LRS). Under current policy, an Indian resident can remit up to $250,000 per year for permitted overseas investments.
But investors cannot apply through Indian brokerage accounts in the same way as domestic IPOs. Participation requires an overseas brokerage account that provides access to U.S. IPOs and supports investments under the LRS framework.
Investors must first transfer funds in U.S. dollars to their overseas brokerage account and then submit their application through a broker who has access to the SpaceX offering. Because demand for the IPO has been exceptionally strong, a lot of investors may find it difficult to get an allocation even after applying. There are reports that investor demand was much greater than the number of shares.
Alternative Route: Invest Through Mutual Funds
For investors who do not wish to open an overseas brokerage account, there may be an indirect route through international mutual funds.
Once SpaceX becomes a public company and it is in the stock indices or portfolios, mutual funds with exposure to U.S. stocks can hold the stock. Investors are more likely to look for such opportunities in Nasdaq-based funds.
Some popular India-based funds offering exposure to Nasdaq-listed companies include:
- Motilal Oswal Nasdaq 100 Fund of Fund.
- Axis Nasdaq 100 US Specific Equity Passive Fund of Fund.
- ICICI Prudential Nasdaq 100 Index Fund.
- Invesco EQQQ Nasdaq-100 ETF Fund of Funds.
- Navi Nasdaq100 US Specific Equity Passive Fund of Fund.
Investors should know that buying these kinds of funds does not necessarily mean that they have access to SpaceX at this stage. The fund’s allocation depends on the fund strategy, index composition, and regulatory requirements.
Why is SpaceX so much in the news for such a big IPO?
The offering has shattered previous IPO records. SpaceX raised $75 billion, which is more than the previous record of the first time Saudi Aramco went public. The company is worth about $1.75 trillion, a figure that reflects investor optimism about the company’s satellite internet business, Starlink, launch services, artificial intelligence ambitions, and long-term ambitions for space exploration.
The IPO has also put Elon Musk’s net worth at the trillion-dollar mark, making him the world’s first trillionaire, according to multiple reports.
Key Risks Investors Should Consider
The excitement around SpaceX is undeniable, but investors should be cautious in terms of this and the risks associated with SpaceX.
The valuation is very high compared to current revenue. Analysts have pointed out that the valuation assumes big future growth and successful execution of ambitious projects. If growth slows down, then investors will suffer.
In addition, there is also profit volatility. SpaceX is losing billions a year, even though revenue has soared, and it is not only expanding, but it has also been losing money at a fast rate.
There are also governance issues. Elon Musk will still have control over the company after the IPO, however, and investors are putting their trust in Elon Musk’s long-term vision and decision-making going forward.
With the help of Indian investors, the SpaceX IPO will be possible through overseas brokerage accounts under the RBI's Liberalised Remittance Scheme. Those who do not want to approach the public market directly can look into international mutual funds that may eventually own SpaceX shares.
But in the end when investing in SpaceX, it’s important to realize that SpaceX’s valuation is based on so much expectation of future growth that everybody loves them for it so much that they are willing to take such risks before investing in one of the most eagerly awaited stock market entries in history.
