ETF And Fund-Vehicle Exposure: Post-IPO Transition Plans, SPV Unwind Mechanics, And Shareholder-Protection Measures For Linked Products

ETF and Fund-Vehicle Exposure: Post-IPO Transition Plans, SPV Unwind Mechanics, and Shareholder-Protection Measures for Linked Products

In recent years, we have seen a proliferation of financial products that link to the securities of unicorns. So, you might ask, now what? How will some of these work in practice? The proof will be in the pudding, but here are a few examples of what some have said and done so far.

• NASA has made clear and definitive statements about its post-IPO position in SpaceX via its website. Tema has confirmed that the SPV through which it gets its SpaceX exposure is subject to a lock-up that it has described as "likely [to] be at least six months" post IPO. After the lock-up, Tema has stated that its investment will convert to freely traded shares of SpaceX. Tema has also announced that post-IPO, NASA may hold public SpaceX shares alongside its existing SPV investment.
• XOVR has previous experience with holding largely anticipation IPO shares as it held (and continues to hold) interests in Klarna PLC prior to its IPO via FIKA Holdings SPV QP, LP. XOVR's exposure to SpaceX is via SpaceX LLC. SpaceX LLC is not expected to immediately distribute shares of SpaceX's Class A common stock immediately following the IPO, however, it is generally expected that SpaceX LLC may do so several months or more after the IPO. ERShares published an FAQ to address questions and concerns relating to the IPO of SpaceX, including changes it has made with the intention to protect long-term investors. Specifically, it has announced new policies restricting large creation units and instituting a 2% redemption fee.
• VCX's prospectus describes a "Buy and Hold" approach. It seeks to remain invested until a liquidity event, may or may not sell when that event occurs, and may continue holding portfolio companies after they go public. Its website makes an even stronger statement that VCX's approach is "investing across the lifecycle of a private company – from early to late stage and continuing to hold after any potential IPOs." However, VCX has not made any specific comment on its post-IPO plans with respect to SpaceX or disclosed any additional details about the SPV(s) through which it achieves its SpaceX exposure.
• DXYZ seeks to invest in venture-backed private technology companies and has experience holding unicorns that have since gone public, including Klarna and Chime. DXYZ has not made any announcements related to its post-IPO plans for SpaceX (and did not make any announcements related to either the Klarna or Chime IPOs), but it is worth noting that its exposure, via SPV, includes multiple share classes of SpaceX.

Originally published in REVERSEinquiries: Volume 1, Issue 5.
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