The Ontario Teachers’ Pension Plan (OTPP) is on the brink of a remarkable financial breakthrough, potentially reaping as much as US$11 billion from its original investment of approximately $300 million in Elon Musk’s SpaceX. This development comes as SpaceX gears up for its public offering next week, marking a significant moment for the Toronto-based pension fund, which first invested in the aerospace firm back in June 2019.
Initial Investment and Growth Trajectory
OTPP’s foray into SpaceX was part of a funding round that raised a total of US$314 million, coinciding with the nascent stages of SpaceX’s Starlink satellite project. At the time, the burgeoning artificial intelligence sector was still on the horizon, making the investment a forward-looking move by OTPP’s newly established Teachers’ Venture Growth (TVG) arm, which was launched just two months prior.
As the years rolled on, SpaceX’s valuation skyrocketed. When the pension fund first invested, analysts estimated the company’s worth to be between US$33 billion and US$36 billion. Fast forward to December of last year, and SpaceX achieved a staggering pre-IPO valuation of US$800 billion. Based on these figures, OTPP’s initial stake could now be valued around US$5.8 billion, excluding any further investments made since 2019. With Musk targeting a US$1.75 trillion valuation for SpaceX and share prices set at US$135 for the upcoming IPO, the potential value of OTPP’s investment could surge to an astonishing US$11.6 billion if market conditions favour the offering.
A Strategic Investment Approach
Olivia Steedman, the executive managing director and global head of TVG, expressed optimism regarding the investment, highlighting the consistent performance of the SpaceX team and their ambitious objectives. “It has been a rewarding investment, and we remain enthusiastic about the company,” she stated. Despite the impressive potential returns, OTPP has refrained from disclosing the exact size of its current stake in SpaceX or the details of any additional investments made since 2019.
The initial investment of US$220 million, equating to around $300 million at current exchange rates, has transformed into a multibillion-dollar asset for the pension fund, underscoring the success of its late-stage venture investment strategy. This approach, while riskier than traditional investments in stocks, bonds, infrastructure, and real estate, has proven fruitful, contributing to about 3 per cent of OTPP’s overall portfolio as of early 2025.
Challenges and Future Prospects
However, the path to realising these gains is not without hurdles. The upcoming IPO will impose a lockup period on existing shareholders, restricting their ability to sell shares immediately after trading begins. This lockup period will last for 180 days, beginning after the anticipated trading start on June 12, making it difficult for OTPP to gauge the immediate market response to SpaceX shares.
Additionally, the recent volatility in the technology market presents a backdrop of uncertainty. The fallout from the collapse of cryptocurrency platform FTX Ltd. in 2022 had previously impacted TVG, erasing a US$95 million investment. Yet, the division has shown resilience, with its portfolio reportedly up 30 per cent last year, buoyed by the successes of SpaceX and other investments like Databricks, Inc.
Gillian Brown, OTPP’s chief investment officer for public and private investments, has indicated that the IPO may not serve as an exit point for the pension fund. Instead, the focus will be on evaluating SpaceX’s growth potential, particularly following its recent acquisition of Musk’s xAI, which operates significant data centres and the Grok chat bot.
Why it Matters
The potential windfall from SpaceX’s IPO underscores the effectiveness of OTPP’s strategic pivot towards late-stage venture investments, allowing the pension fund to tap into high-growth sectors while managing its extensive portfolio. As the world watches SpaceX’s public debut, the outcome will not only impact OTPP’s financial health but may also influence investment strategies for pension funds globally, highlighting the balancing act between risk and reward in today’s dynamic financial landscape.
