Danish pension fund blacklists SpaceX over 'catastrophic governance'

By Frances Schwartzkopff

 

A $25 billion Danish pension fund that earlier this year made headlines by ditching Treasuries as Donald Trump was threatening to seize Greenland now says it won’t touch SpaceX.

 

The company, which is targeting a valuation of at least $1.8 trillion in its initial public offering, is not only “grossly overvalued” but also marred by a “catastrophic governance structure,” Anders Schelde, the chief investment officer of AkademikerPension, said in an email. 

 

SpaceX, which submitted its IPO filing on May 20, is expected to start formal marketing of its offering next month. According to Bloomberg Intelligence, the filing “reveals significant governance concerns,” including the fact that it gives Elon Musk “near-absolute control” of the company.

 

 

Even if the valuation were reasonable, AkademikerPension would still feel compelled to blacklist SpaceX, Schelde said. That’s as Musk is expected to control some 80% of the voting rights, while simultaneously serving as chief executive and chief technology officer, as well as chair of the board, he noted.

 

AkademikerPension said its concerns regarding SpaceX are shared with several US pension funds.

 

In a letter published on May 14 and addressed to Musk, New York City Comptroller Mark Levine, Marcie Frost, CEO of California Public Employees’ Retirement System, and Thomas DiNapoli, the State of New York Comptroller, raised “serious concerns” about what they characterized as an “extreme governance structure” at SpaceX. 

Valuation

SpaceX announced in February that it had acquired Musk’s xAI, which includes the chatbot, Grok, and the social media platform, X. The deal gave SpaceX a valuation of $1 trillion at the time, and xAI a value of $250 billion, Bloomberg News reported.

 

According to AkademikerPension’s calculations, however, SpaceX “cannot reasonably exceed” a valuation of $1 trillion, Schelde said. Therefore, the pension fund “would not be able to justify” participating in the IPO “from an investment-return perspective.”  

 

Investors are effectively being asked to accept an “unprecedentedly low risk premium” for a “highly uncertain company,” where pricing appears to be driven more by Musk’s “narratives than by economic realities,” AkademikerPension said. 

 

Schelde said that AkademikerPension would “like to be able to invest in SpaceX and its technologies” if it weren’t for the company’s perceived valuation and governance risks. “Our decision not to invest is therefore not a reflection of the quality of its technology or engineering expertise.”

 

He said the Danish pension fund is likely to invest in OpenAI, however, which earlier this month prevailed in a lawsuit brought by Musk in which he alleged the ChatGPT maker’s decision to move toward a for-profit structure was a betrayal of its original public-benefit mission.

 

“OpenAI will most likely enter our passive equity portfolio following an IPO, assuming it becomes part of the relevant market indices,” Schelde said. Whether the company will be included in its actively managed portfolios will depend on its IPO valuation and a risk assessment, he added.

 

Despite its small size, AkademikerPension has regularly drawn attention to itself for its decisions. It dumped its stake in Tesla Inc. last year, citing concerns that Musk was “in the process of destroying” the company’s brand and value. In January, AkademikerPension said it was offloading Treasuries, based on its assessment that the US government is “not a good credit.”

 

When it comes to SpaceX, the overall risk assessment means AkademikerPension will “not participate in the IPO, or any secondary-market transaction involving the company, including through the indexed portion of our equity portfolio,” Schelde said.

 

Goldman Sachs Group Inc., Morgan Stanley, Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are leading the IPO along with 18 other banks.