Underwriters for SpaceX’s anticipated $75 billion initial public offering have been instructed to reject orders from investors in Hong Kong and China, due to US regulations concerning the export of essential technologies, according to sources familiar with the situation.
The primary banks managing the deal have notified other banks in the underwriting group to prevent customers from Hong Kong and China, including private banking clients, from placing orders for the offering, citing regulatory and compliance concerns, the sources indicated, preferring to remain anonymous as the information is confidential.
The banks were informed that this decision stemmed from internal policies related to the US International Traffic in Arms Regulations, which oversee exports of defense-related technologies and technical data, some of the sources reported.
Goldman Sachs Group Inc. and Morgan Stanley, the leading banks on the transaction, did not immediately provide comments upon request. A representative from SpaceX could not be reached for comment beyond regular business hours.
On Friday, SpaceX’s website was unreachable from Hong Kong and Shanghai, with attempts resulting in an error message indicating the company had restricted access from IP addresses in these regions.
In recent years, US technology and AI companies have grown increasingly wary of accepting investments from Chinese backers, due to intensified scrutiny from regulators and clients regarding potential national security and data safety concerns.
Businesses seeking government contracts or operating in sensitive fields often aim to keep their shareholder compositions clear of investors that might prompt investigations by US authorities or create apprehension among potential customers.
This trend contrasts sharply with the previous decade, during which Chinese venture capital firms, private equity funds, family offices, and affluent individuals actively invested in Silicon Valley startups.
Many utilized offshore special purpose vehicles and fund structures that concealed the true origins of their capital, allowing them to invest in fast-growing technology firms alongside global investors.
As geopolitical tensions between the US and China have escalated, however, founders and underwriters have become more discerning regarding capitalization tables ahead of public offerings, with some firms deliberately reducing or completely avoiding Chinese ownership.
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(Edited by : Navneet Singh)
