A businessman with ties to Chinese military contractors was among foreign investors who acquired stakes in SpaceX when it was still a private company. An entity linked to the Qatari royal family also took a stake.
The new details come from a list of private investors obtained by ProPublica that sheds light on a particularly sensitive question for Elon Musk’s rocket company: which people in countries like China bought the company and how. SpaceX has built its business on sensitive US government work, such as manufacturing spy satellites for the Pentagon. Although there is no ban on Chinese investment in U.S. military contractors, such investments are heavily regulated.
In a sign of its sensitivity to these concerns, SpaceX barred investors from China and Hong Kong from buying shares in its IPO last week due to “regulatory and compliance risks.” Bloomberg reported. The US government says China has a strategy of using its investments in sensitive industries for espionage and to gain access to advanced technologies.
The company’s IPO last week was its largest ever, making Musk the world’s first billionaire. Musk has extensive business interests in China, where Tesla builds many of its cars.
The new filings detail at least a dozen investors with addresses in mainland China, Hong Kong or Russia who acquired stakes in SpaceX years ago through a middleman company in the United States called Tomales Bay Capital. The investments are relatively modest, ranging from $800,000 to $40 million, and were made between 2018 and 2021.
One investment came from an entity owned by David Su, co-founder of the prominent Beijing venture capital firm MPCi. The Su entity invested $15 million in a SpaceX fund in 2020, according to the investor list. This wasn’t Su’s only foray into the space industry; his business was a leading donor of certain Chinese competitors of SpaceX. Two satellite companies that Su’s company invested in were sanctioned by the US government for allegedly aiding the notorious Russian mercenary organization, the Wagner Group. One of the companies was sanctioned again last month for allegedly helping Iran attack U.S. military forces during the war.
MPCi has also worked with Chinese government investment funds. Last year, the website of China’s Ministry of Science and Technology named Su’s company as a partner in a state-backed effort to grow the country’s aerospace industry.
There is no evidence that Su did anything wrong. But the key question from the U.S. government’s perspective would be whether China-based investors have access to nonpublic information about SpaceX’s technology or strategies, said Sarah Bauerle Danzman, a professor at Indiana University who has worked for the State Department reviewing foreign investments. “If an investor has conflicts of interest with other companies in China – if they could pass that information on to their competitors – that could constitute a national security issue,” she said.
In a statement, MPCi said Su “has not received any non-public information about SpaceX.” The statement described Su as “a Singapore citizen residing in Singapore”, adding: “MPCi is a brand with different teams and funds. Mr Su is responsible for the US dollar funds.” According to a Profile 2024 According to him, Su “has spent almost 100% of his time in China over the past 20 years.”
A lawyer for Tomales Bay Capital said in a statement that the company “did not provide any non-public and sensitive information regarding SpaceX to investors.” He said the investors are passive sponsors: “Aside from the fund’s financial data which includes quarterly valuations, Tomales Bay investors have not received any other information regarding SpaceX.”
“The vast majority, if not all, of the investors on Tomales Bay’s unsealed investor list are not citizens of any foreign adversary, including Russia or China,” said attorney Ryan Stonerock, “and certainly none of them are agents of Russia or China, or any other foreign adversary.” He added that some investors “may have mailing addresses listed” in Russia or China, but do not live there “and are in fact citizens and residents of the United States or other countries that are not foreign adversaries.”
SpaceX did not respond to questions. One of the Chinese space companies sanctioned by the US government, Spacety, previously refused provide support to the Wagner group.
All investors located in China or Russia identified by ProPublica appeared to be wealthy businessmen or their children.
The new documents come from a corporate dispute in Delaware involving Tomales Bay Capital. The court records were unsealed this month after ProPublica decided to make them public, with the help of attorneys from the Reporters Committee for Freedom of the Press and the Shaw Keller law firm. Tomales Bay Capital appealed to the Delaware Supreme Court, which ruled in favor of ProPublica.
Tomales Bay Capital is led by an investor named Iqbaljit Kahlon, who has long been close to SpaceX executives and even involved in the company’s operations. SpaceX Chief Financial Officer Bret Johnsen, who has been there for 15 years, said Kahlon “has been with the company in one way or another longer than I have.”
Before SpaceX went public, Kahlon made his fortune acting as a middleman for investors hoping to add the rocket company to their portfolio. His company regularly bought SpaceX shares, bundled them into investment funds, and then charged fees to investors who bought shares of those funds.
In a 2021 speech to a potential investor in China, Kahlon promised special access to SpaceX, including quarterly updates on the company’s business development, “visits to SpaceX, and interview opportunities with Space X’s chief financial officer,” according to meeting minutes, which were later released in court records.
While ProPublica And other points of sale have previously reported on the existence of Chinese investors in SpaceX, the identities of most of the rocket company’s investors have been closely guarded. Kahlon’s list of investors adds hundreds of names to SpaceX’s public roster of owners. The list details investments in several Tomales Bay Capital funds that acquired SpaceX shares; it is possible that some funds also hold stakes in other companies.
Some of the SpaceX investors on Kahlon’s roster are easy to identify: Indian politician Abhishek Singhvi; Betsy DeVos, the former US Secretary of Education; a British Virgin Islands company owned by Indonesian billionaires. But others on the list are shell companies whose ultimate owners remain hidden.
One of those companies is a Delaware LLC called HAL9001 Partners Fund I, which invested about $10 million in a SpaceX fund in 2020. incorporation documents for HAL9001 were signed by venture capitalist Roman Sobachevskiy. The Treasury Department recently fined a company co-owned by Sobachevskiy several hundred million dollars for managing a separate investment on behalf of a Russian oligarch sanctioned. Sobachevskiy has not been personally accused of wrongdoing.
A spokesperson for Tomales Bay Capital said the oligarch “had no involvement in the investment.” Sobachevskiy did not respond to questions, including about who financed SpaceX’s investment.
The documents also highlight ties between SpaceX and Qatar. Funds affiliated with Bracket Capital — an investment firm with offices in Los Angeles, London and Qatar — invested approximately $48 million in a series of deals from 2017 to 2020, according to the documents. Bracket has money from the Qatari royal family, according to an email Kahlon sent to SpaceX’s chief financial officer. The ledger also indicates that Doha, Qatar is the address of a mysterious entity called AM FIG Cayman Limited, which invested around $10 million in 2020.
The documents do not clarify whether Bracket’s investments were made on behalf of the royal family or another client. In 2021, as Kahlon was soliciting support for another deal with SpaceX, he texted a Bracket employee: “At the end of the day we can just send Yalda to talk to a big guy. We need a bailout lol.” (Yalda Aoukar is the co-founder of Bracket. It is unclear whether the “big guy” refers to a member of the royal family and what Kahlon meant by “a bailout.”)
Bracket did not respond to requests for comment.
The investments covered in the ledger represented tiny percentages of SpaceX but would have generated windfalls. The company’s valuation has exploded in recent years, from $33.3 billion in 2019 to $2.7 trillion as of Wednesday morning.
Last year, ProPublica reported on SpaceX’s unusual approach to accepting money from Chinese investors. According to testimony from the Delaware casethe company allowed Chinese investors to buy stakes in SpaceX on the condition that the money was routed through the Cayman Islands or other secret offshore centers.