As SpaceX makes its public debut, some investors who backed the company through special purpose vehicles (SPVs) may be facing a significant headache. With layers upon layers of these vehicles, it’s unclear how many shares they’ll end up with—or if any at all.
In typical SPV structures, multiple parties pool their money to invest in one entity. But SpaceX presents an unprecedented case: the IPO is riddled with multi-layered SPVs that create a complex ownership nightmare. Since demand has been sky-high, investors have sometimes formed new SPVs from their shares, creating a structure stacked four or five layers deep.
The first SPV layer will have 30 days to distribute stock, but the next tier might not see any action for months, while the bottom SPV may have to wait eight to nine months. And there’s more: some of these investors might find that their expected shares are eroded by fees pocketed by SPV managers.
Even if an investor is lucky enough to receive shares, they could still face a messy situation. A secondary investor told TechCrunch that the communication chain can be broken at any point, leaving investors in the dark until lock-up agreements expire. And with bad actors like Giovanni Pennetta recently imprisoned for fraud, the fear is that others might not be as trustworthy.
