The new division of the Ontario Teachers’ Pension Plan that seeks disruptive investments is backing one of the most disruptive executives of today by pumping money into Elon Musk’s SpaceX.
Mr. Musk, perhaps best known as the chief executive officer of publicly traded automaker Tesla Inc., is also the founder of SpaceX, a privately held company that ultimately aims to send a commercial spacecraft to Mars. The company has made more than 75 successful rocket launches, Teachers said, and it’s developing a satellite system that would offer a global broadband internet network.
Neither Teachers nor SpaceX disclosed the size and terms of the investment. The U.S. business news channel CNBC said SpaceX was raising a total of US$314.2-million from an unknown number of investors, bringing SpaceX’s fundraising this year to US$1.33-billion. CNBC said in May that investors valued SpaceX at US$33.3-billion.
Founded in 2002, SpaceX posted just more than US$1-billion in revenue, according to S&P Global Market Intelligence. No profitability figures are widely available.
The deal is the first under the Teachers’ Innovation Platform (TIP), formed earlier this year to focus on late-stage venture-capital and “growth equity” investments in companies that use technology to disrupt incumbents and create new sectors. The 10-employee group is headed by senior managing director Olivia Steedman, a 17-year veteran of Teachers, who reports to chief investment officer Ziad Hindo.
“Our investment in SpaceX fits well within the TIP investment strategy of capitalizing on significant global opportunities in new businesses and sectors that are emerging as a result of unprecedented technological change,” Ms. Steedman said.
In a statement, Teachers said SpaceX was “a compelling investment opportunity due to its proven track record of technology disruption in the launch space and significant future growth potential in the satellite broadband market.”
Teachers posted a return of 2.5 per cent for 2018 to close the year at $191.1-billion in assets. Like other larger Canadian pension plans, it relied on returns from assets such as real estate, infrastructure and the shares of private companies as global equity markets struggled.
Its private-equity portfolio returned 19.5 per cent in 2018 and, by year-end, it had $33.4-billion in investments – good for 18 per cent of the fund. Teachers recorded a loss of 3.6 per cent on publicly traded equities in 2018. They closed the year at $31.6-billion, or 17 per cent of the portfolio.
Mr. Musk has garnered more headlines in the past year for his stewardship of Tesla, notably for a tweet that suggested the company was going to go private at $420 a share, with “funding secured.” No such deal was in place, and the U.S. Securities and Exchange Commission filed securities fraud charges against him. The parties settled the case, with limitations on Mr. Musk’s tweeting, but the SEC later went to court alleging a breach of the deal. They then reached a new tweet-restricting agreement.
Tesla, meanwhile, has burned through cash in its quest to make a mass-market electric vehicle to complement its higher-end offerings, with all of Mr. Musk’s pronouncements about orders and delivery numbers watched closely.
Last week, Mr. Musk tweeted a meme that said “Occupy Mars” with a photo of a blood moon. Twitter users debated whether it was a mockery of U.S. President Donald Trump’s own lunar confusion, or a similar error.
In April, Mr. Musk tweeted “My Twitter is pretty much complete nonsense at this point.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.