Valor Equity Partners, the venture firm founded by longtime Elon Musk backer and current SpaceX board member Antonio Gracias, has opted to give a chunk of its SpaceX stock directly to its limited partner investors rather than cash out and issue returns. The transfer covers 8.5% of Valor's holdings and is worth about $8.5 billion, Bloomberg estimates, based on an SEC filing.
Valor built its SpaceX position over decades of investment, and entities controlled by Gracias owned more than 500 million shares at the time of the IPO. That made the firm's stake second only to Musk, who owned more than 6 billion shares at the time. Even after the giveaway, Valor will still own more than 460 million shares, according to the SEC disclosure.
The decision to transfer ownership of the shares could give Valor's limited partners a tax advantage. More importantly, it avoids dumping a giant tranche of SpaceX shares into the open market. Such a sale could create a glut of available stock and push the share price lower.
SpaceX is already down about 10% since its blockbuster IPO day, making the handling of large blocks of stock a sensitive issue for investors. By handing the shares to its limited partners instead of selling them, Valor keeps the stock out of the open market while giving its investors direct ownership of a valuable SpaceX position.