SpaceX Strikes Rare $0 Fee Deal on Greenshoe, Costing Banks $75 Mn

SpaceX has struck an unusual deal with its investment bankers, agreeing to receive no fees on the greenshoe option that covers an additional 15% of shares.

Bloomberg reported that this extraordinary arrangement will let Musk-led rocket, satellite and AI giant pay $0 fees to investment bankers, including Goldman Sachs and Morgan Stanley, on additional shares, leaving the banks missing out on roughly $75 million.

Although, the additional shares allows the banks to raise an additional amount of $11.25 billion.

Price Breakdown

According to Reuters, the conglomerate raised $75 billion in its initial public offering (IPO), with an offering price of $135 per share. Shares jumped nearly 20% on the first day, closing at $161.50 after reaching a high of $176.

Beyond the greenshoe waiver, according to Bloomberg, SpaceX had already negotiated its overall fee structure to the bone. The company agreed to pay dealmakers $500 million on the offering, approximately 0.67% of the $75 billion raise.

While that sounds enormous, it is still a fraction of the 4% to 7% banks typically charge on IPOs. At that low rate, it still ranks among the biggest fee-paying deals on Wall Street of all time.

With lead banks like Goldman Sachs and Morgan Stanley taking the biggest share of the fee pool, nearly $100 million each. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., with $75 million each, while a dozen other banks managed a co-manager role, took about $2 million each.

Bankers have 30 days to decide whether to exercise the greenshoe option.

Greenshoe History

The blockbuster debut made SpaceX the largest IPO in history, surpassing Alibaba $25 billion raise in 2014, which has itself set the record at the time after underwriters fully exercise the greenshoe option.

The greenshoe takes its name from Green Shoe Manufacturing, the first company to use the structure in its 1960 IPO. It has since become standard practice in major U.S. listings.

The report explained that the greenshoe mechanism itself serves a dual purpose, stabilising early trading by giving underwriters flexibility to manage share price volatility, while also providing the issuing company with an opportunity to raise additional capital if investor demand stays strong.