SpaceX is set to make its public debut, but some investors who backed the company through special purpose vehicles (SPVs) still do not know how many shares they are entitled to or whether they will receive any at all. The complexity of multi-layered SPVs has created a situation where the true ownership of shares is unclear, with investors at the bottom of these structures potentially facing significant delays or even the risk of not receiving shares. According to sources, these investors will not learn the actual number of SpaceX shares they own until the company’s rolling lock-ups, which are scheduled to last about four months, begin to lift. The structure of these SPVs means that the first-layer SPV will have 30 days to distribute shares to its investors, while the next layer down may wait up to 30 days, and the final layer could wait as long as eight or nine months. This delay is due to the fact that SPV managers will not begin distributing shares until they themselves receive them. The issue has raised concerns among investors, particularly those in lower-tier SPVs, who may find they own fewer shares than expected or, in rare cases, may not receive any shares at all. Source: techcrunch
Investors in multi-layered SPVs face the risk of being misled or even scammed, as the structural complexity of these vehicles has created an environment where even legitimate sponsors may inadvertently mislead their backers. A secondary investor who asked to remain anonymous told TechCrunch that some investors in 'messy' multi-layered SPVs may be surprised to learn that some of the shares they expect to receive will be 'eroded by fees' pocketed by the SPV. The issue stems from a lack of transparency and communication, as each layer of the SPV only knows what is happening in the layer above them. This has led to a situation where the ownership structure has become so convoluted that even the best-intentioned SPV sponsors may end up misleading their investors. The fear is that some of these SPVs may be fraudulent, with investors at the bottom of the structure having to confirm that every manager above them was legitimate. However, given the complexity of these deals, some buyers may not have fully vetted the entire chain. Source: techcrunch
SpaceX's IPO represents a significant test for the legitimacy of multi-layer SPVs, as the company is the first major case of an IPO with such a complex structure. In recent months, companies like Anthropic and Anduril have disallowed these structures, raising concerns about the potential for fraud or misrepresentation. The fear is that some SPV managers may have fabricated access to non-existent allocations, as seen in the case of Giovanni Pennetta, who was recently sentenced to four years in prison for such actions. Investors at the bottom of these structures may face the risk of not receiving any shares, as seen in the case of a friend who bought SpaceX through a two-layer SPV in 2021 and has not heard from the SPV manager for a year. Source: techcrunch
