Can you invest in SpaceX IPO from India? Check key FAQs

The SpaceX IPO has generated significant buzz among Indian investors ahead of its expected debut on NASDAQ on June 12. However, participating in the offering is not straightforward for Indian investors due to several constraints.

Is it possible to participate from India?

The short answer is yes. It is possible to participate in the SpaceX IPO for investors in India.

Currently, no law in India bars investors from participating in an international IPO.

However, it is not easy to participate. And even if you manage to participate, there is very little chance that you can get SpaceX shares allotted through the IPO process.

What are the ways to participate in this IPO?

Indian residents cannot directly participate in this IPO. However, they may do so through their overseas brokerage accounts funded under the RBI's Liberalised Remittance Scheme (LRS). Here, you need to check whether your international brokerage is offering this IPO.

Not all retail accounts have access to US IPOs. The company has named various US-based retail platforms as allocation channels. Through this route, the typical IPO filing process would be as follows:

The LRS allows investors to remit up to $2,50,000 per year and they do not stop an Indian investor from participating in international IPOs.

In simple words, if you already have an international brokerage account, you may participate. If not, you can't.

There is another option: one may participate through GIFT City-based investment platforms. Several IFSC-registered brokers allow investing in US stocks in dollars. However, investing through GIFT City is not accessible to the general retail investor. There are separate rules for investing through GIFT city that you should know before exploring this option.

What are the chances of allotment?

While you may manage to participate in this IPO from India, the chances of allotment of SpaceX shares through the initial public offering are low. In fact, it is always a challenge for a foreign retail investor to get a US IPO allotment. This is because most of the US IPO allotments are typically made to institutional investors.

However, a report in Reuters say that around 30% of the IPO, which is equivalent to roughly $22.5 billion, has been earmarked for retail investors. So investors may try out their luck, if they want.

The report highlights that international investors face significant challenges in participating in SpaceX IPO, such as additional eligibility, limited share allocations, and regulatory restrictions where they live.

What if I want to have SpaceX shares in my portfolio?

While the chances of getting SpaceX shares during IPO may be dim, Indian investors can add them to their portfolio when they list for regular trading on NASDAQ. They may also explore international mutual funds tracking Nasdaq 100 index as the SpaceX shares are set to be part of this index soon after launching. However, most of the international funds in India currently have very limited investment options due to RBI limits.

What are the countries where investors will be able to buy SpaceX shares?

Investors in following countries will be able to buy SpaceX shares, according to Reuters.

However, all the above countries have certain restrictions.

What are the risks?

The SpaceX IPO valuation of around $1.75 trillion is roughly 100 times of its trailing sales. The valuation assumes years of rapid growth ahead. However, investors should be wary as the company operates in a capital-intensive industry where financial performance can be very different from hype. Moreover, the company has also said it is not expecting to be profitable soon. Further, SpaceX is unlikely to be included in S&P 500 index in near future as it doesn't meet profitability and other eligibility criteria.