Mirae Asset Securities collected $1.14 billion in orders from its South Korean clients for the SpaceX IPO. The biggest public offering in history left the country's largest broker empty-handed because of a simple misunderstanding over email timing.
How a Misunderstood Email Cost $1.1 Billion
The SpaceX IPO was massive - $86 billion total, the largest ever. Twenty-three underwriters helped sell the shares. Mirae was the only one that got no allocation.
The problem started in mid-May. Lead arrangers Goldman Sachs, Morgan Stanley, and Citigroup asked all underwriters to indicate investor interest. Mirae treated that request as the submission of binding orders.
But the actual binding orders were not due until June, when the lead banks sent a separate email. Mirae did not submit any orders at that later stage.
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As a result, more than $1.1 billion worth of South Korean investor demand never entered the IPO order book. That demand came from Mirae's clients who had subscribed in good faith.
Apologies and an Expanded Probe
On June 15, Mirae's vice chairmen Kim Mi-seop and Heo Seon-ho sent an apology text to clients. "We bow our heads in apology for delivering such unfortunate and heavy news to customers who participated in the SpaceX IPO subscription with great interest and anticipation," they wrote, as reported by the Seoul Economic Daily.
The apology came after a complicated regulatory backdrop. In April, it became clear that SpaceX wouldn't be able to offer direct access to Korean retail investors, in part due to regulatory reasons. Mirae decided to instead solicit bids through a private placement from selected institutions and rich clients. On May 20, SpaceX's filing with the US Securities and Exchange Commission showed that the shares would be offered in South Korea through a private placement.
But even with that switch, the misunderstanding at the order stage doomed the effort. Meanwhile, other South Korean players fared better. So did Mirae Asset Global Investments, an affiliate of the brokerage.
Lee Chan-jin, head of the Financial Supervisory Service (FSS), said on June 22 that he found it "incomprehensible even now" that Mirae ended up with no shares. He had expected Korean professional investors to "of course" win allocation.
What the FSS Is Looking At
The findings have not been disclosed yet, but the probe could lead to sanctions. Mirae's vice chairmen pledged a review of the process and measures to "restore consumer trust."
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