Why ‘the largest IPO ever’ was significant for Australian capital markets

Last week, the initial public offering (IPO) for SpaceX took place, which was undertaken to fund its growth initiatives, including expansion of Starlink and other space technology businesses. The IPO raised approximately US$75 billion, through the sale of more than 550 million shares at US$135 per share, giving the company a valuation of around US$1.77 trillion at listing, according to The Wall Street Journal.

Two of Australia’s largest law firms, Mallesons and Gilbert + Tobin, advised on the matter, with the former acting for the global syndicate of 23 underwriters, and the latter acting for SpaceX, both on the Australian aspects of the IPO.

The IPO was conducted as a US-led global offering, with Australia being one of a few jurisdictions in which shares were offered, which – Mallesons said – speaks to the strength and credibility of Australia’s capital markets. G+T supported this, noting it reflects not only a desire to have Australia-based investors on SpaceX’s register but also a growing demand from Australian investors for direct access to major international listings at IPO, underscoring the increasing globalisation of capital markets.

The Mallesons team was led by partners David Friedlander and Jack Hill, while the G+T team was led by partners Peter Cook and Adam D’Andreti.

Mallesons partner Jack Hill said the significant cross-border capital markets transaction “highlights the increasing integration of global capital markets and the need to seamlessly align international and domestic disclosure regimes”.

His fellow partner, David Friedlander, added that against a backdrop of increasing focus on both public and private markets, it reinforces the “strength and sophistication” of Australia’s capital markets framework.

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“It demonstrates Australia’s ability to facilitate participation in landmark global offerings and reinforces its position as a strategically important jurisdiction for international issuers and investors,” Friedlander said.

On the G+T side, D’Andreti called it a “genuinely innovative” transaction for the Australian market.

“The structure required careful navigation of Australia’s disclosure regime and ASIC’s regulatory settings, while preserving the integrity of the US IPO process. It says something about the company that SpaceX has pioneered a truly novel approach to bringing IPOs to the broader retail investor market, not only in the US but in Australia and other markets outside of the US,” he said.

This shows, D’Andreti went on, that Australian investors can access global capital markets opportunities “in a way that is thoughtful, compliant, and commercially effective, and who knows, we might see more of this again on other large-scale offshore IPOs”.

Cook said that to be instructed by SpaceX “to test the art of the possible” – to incorporate an Australian retail offer into the overall offer process – was a true challenge.

“To facilitate an Australian retail offering into the global offering required careful and unique consideration of issues relevant to disclosure, distribution, marketing, timetable, settlement, and regulatory engagement,“ he said.

A roadmap for including Australia in global offers

Reflecting on the significance of the IPO, Friedlander and Hill told Lawyers Weekly that the transaction was significant from an Australian perspective for numerous reasons.

“It illustrates the strength and credibility of Australia’s capital markets on the global stage; it demonstrates strong demand from Australian retail investors for direct access to major global IPOs; and introduces a novel structure to the Australian market where the main disclosure was provided through the US prospectus, supplemented by an Australian specific ‘wrap’ to address local disclosure requirements,” the pair outlined.

Moreover, they added, it was a “great example of what can be achieved when lawyers, other advisors and the regulator work collaboratively for the benefit of Australian investors, and highlights that there is still room for innovation”.

Friedlander and Hill added that they hope the transaction serves as a roadmap to encourage other large international IPO aspirants to consider Australia as a viable and important component of any global offer.

“As equity capital markets lawyers, we see the success of this transaction as reinforcing the case for IPOs as an attractive near-term option for local companies,” they said.

“We also expect that lawyers in Australia will see more cross-border securities offerings and that deep understanding of Australian securities laws will be the key to winning work in the year ahead.”

How Australian corporate advisory work is shifting

For Cook, the SpaceX IPO was “not a standard Australian workstream bolted onto a global IPO”.

The company, he said, wanted to test what was possible; whether Australian retail investors could be brought into the world’s largest IPO in a way that was direct, compliant, and commercially workable. That required, he said, a structure that dealt with Australian disclosure, distribution, marketing, settlement, and ASIC engagement, while not disrupting the US IPO process.

“The lesson is that best practice on transactions of this scale is not just technical accuracy,” he said.

“It is judgment, speed, and execution discipline, knowing where the regulatory risks sit, engaging early, and keeping the structure simple enough to work in a live global timetable.”

And, according to D’Andreti, the transaction “says a lot” about where corporate advisory work for Australian practices is heading.

“Capital markets are increasingly global, investor demand is increasingly borderless, and Australian law firms need to be able to help clients solve for both,” he said.

“Looking ahead, the best opportunities will be for lawyers who can combine regulatory rigour with commercial imagination.”