SpaceX has instructed the banks managing its $75 billion initial public offering to reject any investment orders placed by individuals or entities in Hong Kong and mainland China, according to people briefed on the situation. The directive is part of the paperwork and compliance protocols being applied as the company prepares what is expected to be the world’s largest public offering.
On Friday, users attempting to access the company’s website from internet addresses in Hong Kong and Shanghai found the pages inaccessible. That access restriction coincided with the underwriting teams implementing geographic limitations on who may participate in the IPO.
Banks involved in handling the offering attributed the decision to U.S. International Traffic in Arms Regulations - ITAR. Those regulations govern the export of defense-related technologies and information, and the banks said ITAR created regulatory and compliance risks that informed the decision to exclude investors in the affected jurisdictions.
The decision to block orders from Hong Kong and mainland China reflects a broader trend within the U.S. technology and artificial intelligence sectors. Companies in those industries are increasingly declining capital from Chinese investors, citing national security and data-security concerns. That approach contrasts with the prior decade, when Chinese venture capital and private equity frequently invested in Silicon Valley startups.
The restrictions could affect the investor base for the offering and are being implemented amid heightened regulatory scrutiny around technologies with potential defense applications. SpaceX and the underwriting banks have framed the geographic exclusions as a compliance step to align the IPO process with export-control obligations.
Context and market implications
While the IPO is positioned to be the largest public offering on record, the underwriter instructions to reject orders from Hong Kong and China shrink the pool of potential investors in two significant markets. The banks handling the deal have cited export-control law - specifically ITAR - as the governing constraint. The broader pattern of U.S. tech and AI firms declining Chinese capital is highlighted by observers as a shift in cross-border investment flows, driven by heightened concern over national security and data privacy.
At this stage, the measures in place focus on managing compliance risk rather than forecasting market outcomes. How these restrictions will affect demand, pricing, or allocation for the IPO is not detailed in available accounts.