Mirae Asset Securities' failed IPO allocation hits domestic fund managers

Korea Investment Management secures some shares through open-market trading

Mirae Asset Global Investments to add SpaceX on T+2

[Created using ChatGPT]
[Created using ChatGPT]

By Jung Yoon-hee, The Herald Business

South Korean asset managers have been caught in the fallout after Mirae Asset Securities, a member of the global underwriting syndicate for Elon Musk's SpaceX, received no IPO shares to distribute.

According to the financial investment industry on Saturday, Korea Investment Management and Mirae Asset Global Investments had each planned to acquire SpaceX shares through the IPO subscription process and add them to their respective exchange-traded funds.

Korea Investment Management had publicly announced its intention to participate in the SpaceX initial public offering, with plans to distribute any allocated shares between its ACE US Space Tech Active ETF and the Korea Investment Global Space Technology & Defense Fund.

Mirae Asset Global Investments was also reported to have sought IPO participation through strategic products including its TIGER Global AI Active ETF and TIGER Global AI Power Infrastructure Active ETF.

Both firms had submitted their SpaceX subscriptions through Mirae Asset Securities — only for those efforts to come to nothing after Mirae Asset Securities received no shares from the lead underwriter.

Mirae Asset Securities had originally joined the global underwriting syndicate and was set to receive 2,314,815 shares. Lead underwriter Goldman Sachs ultimately allocated no sellable shares to Mirae Asset Securities or other syndicate members during the final allocation process. The reallocation was driven by a surge in demand from institutional investors immediately after SpaceX began trading on the Nasdaq.

On the morning of June 12, Korea Investment Management contacted the underwriter — Mirae Asset Securities — and posted on its website that it had received an allocation and would announce the exact number shortly. Later that afternoon, it added a notice saying the announcement would be delayed due to confidentiality requirements requested by the underwriter.

After Mirae Asset Securities confirmed it had received nothing, Korea Investment Management issued a statement saying it had been informed through Mirae Asset Securities that the global lead underwriter had not allocated any sellable shares to the domestic underwriting syndicate during the final allocation process conducted in the early hours of June 12 local time. "We have accordingly confirmed that we have received no allocation from our participation in the SpaceX IPO," the firm said.

The firm added that it had acquired some SpaceX shares for its ACE US Space Tech Active ETF through open-market trading during the session, though the exact size of the purchase was not disclosed.

"We understand this outcome resulted from the unique and unpredictable nature of the US IPO market, but we are deeply aware of how much our investors were counting on SpaceX IPO shares being included," Korea Investment Management said. "We sincerely apologize for delivering this news. Going forward, we commit to communicating more clearly about the variability of investment information and to approaching our responsibilities with greater precision and accountability."

Mirae Asset Global Investments, which manages passive ETFs, is expected to begin adding SpaceX shares two trading days after the listing, on T+2.

The disruption is expected to affect other asset managers as well. Several firms running passive space-themed ETFs had planned to add SpaceX after its listing, while active manager Timefolio Asset Management had also intended to include SpaceX in its TIME Global Space Tech & Defense Active fund through open-market purchases on the day of the listing.

SpaceX made a strong debut on the Nasdaq on June 12 local time, closing up 19.34 percent from its IPO price at $161.11 per share after touching an intraday high of $176.52. Its market cap surpassed $2 trillion at the close, placing it sixth on the Nasdaq by market capitalization. Elon Musk, the company's largest shareholder, became the world's first "trillionaire" — a person whose net worth exceeds $1 trillion.


yuni@heraldcorp.com