Big Banks Seeking a Piece of SpaceX's IPO Must Subscribe to Elon Musk's Grok
It's not uncommon for large companies doing big deals to make demands of their bankers and lawyers.But Elon Musk has made a particularly bold demand of his Wall Street advisers before the initial public offering of his company SpaceX.Musk is requiring banks, law firms, auditors and other advisers working on the IPO to buy subscriptions to Grok, his artificial intelligence chatbot that is part of SpaceX, according to four people with knowledge of the matter, who were not authorized to speak publicly about confidential discussions.Some of the banks have agreed to spend tens of millions on the chatbot and they have already started integrating Grok into their IT systems, three of the people said.Musk and a SpaceX spokesperson did not respond to requests for comment.For almost any major IPO, banks find ways to ingratiate themselves with the company going public, as well as its CEO. But after several years with few significant public offerings coming to market, Wall Street has been salivating for a deal like SpaceX, which is forecast to be one of the largest in history.The IPO is expected to raise more than $50 billion at a valuation above $1 trillion, which means the banks could generate fees in excess of $500 million for advising on the deal.Musk's ability to secure business from the banks for his AI chatbot also shows the enormous sway of the world's richest man over a banking sector clamoring for his business.The banks' purchases of Grok subscriptions were not merely goodwill gestures, according to three people with knowledge of the arrangements. Musk insisted that they purchase the chatbot services. He has also asked the banks to advertise on X, his social media site that is also owned by SpaceX, but was less adamant about that request, according to two of those people.For now, five banks are expected to work on the offering -- Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley.Musk's agreement with banks is a big score for SpaceX, which merged with xAI in February and whose Grok is a distant fourth in the AI race behind OpenAI's ChatGPT, Claude and Google's Gemini.This article originally appeared in The New York Times.
