The news is official: Italy’s largest banking group, Intesa SanPaolo, has announced in a note that it intends to invest in the aerospace sector by buying shares in Elon Musk SpaceX.
Elon Musk’s company was chosen because the bank considers the aerospace sector to be very important for the development of the world’s economies, and because SpaceX has demonstrated a cutting-edge vision of the future.
Intesa SanPaolo and the shares of SpaceX, Elon Musk’s space company
The Intesa SanPaolo Group was created in 2007 through the merger of Banca Intesa and SanPaolo IMI.
However, Istituto Bancario San Paolo was founded in Turin in 1563.
The legal and administrative headquarters of the new group remained in Turin, with a second operational headquarters in Milan.
It is now the largest Italian bank, both in terms of number of branches and market share, with a turnover of EUR 21.47 billion and more than 95,000 employees. Its shares are included in the basket of the FTSE MIB index.
Intesa SanPaolo is listed on the Milan Stock Exchange and is also included in the Euro Stoxx 50 and Euro Stoxx 50 Banks indices.
As news of the investment in SpaceX spread, the share price rose by almost 1.5% to almost €2.4. However, this is in line with the average for 2023, so the news did not have a particularly significant impact.
The year started at around €2, with a peak of €2.6 at the beginning of August. By the end of January, however, it had already risen to €2.4, so it is fair to say that it has been more or less sideways around its current value for more than eight months now.
SpaceX was founded in 2022 by Elon Musk.
It was the first company Musk invested in after selling PayPal, and it was also his first major success.
After a particularly difficult start, in 2006 it was selected by NASA to develop a rocket for the International Space Station (ISS), with a contract worth almost $400 million.
In 2008, another NASA contract worth $1.6 billion followed, and the company really took off.
With a turnover of two billion dollars and 13,000 employees, the company is at least an order of magnitude smaller than Intesa Sanpaolo.
However, it is a fast-growing company and is not listed on the stock exchange.
Elon Musk is still the majority shareholder, but he is not the only one. He is also the CEO, Chairman and CTO.
In fact, it is a company that, although it has other shareholders besides Musk, is completely and almost entirely controlled by him.
Intesa Sanpaolo’s investment in Elon Musk’s company: SpaceX
Intesa Sanpaolo has not yet revealed the details of its investment, not even the amount.
It is therefore not known how much it intends to invest or when the purchase will actually be completed.
The only thing that is known is the intention to invest, and given that SpaceX is not a particularly well-capitalised company, it is possible that the Italian bank’s investment will be significant.
For example, the last seed financing round, completed in June, was for $750 million, while the Intesa Sanpaolo group bought back its own shares on the market in the three months to September, spending more than €79 million.
It therefore seems unlikely that this is just a marginal investment, especially at a particularly favourable time for banks. However, given the nature of the disclosure, it does not appear that it will lead to any relevant threshold being exceeded.
Moreover, in the 2022-2025 business plan published two years ago, the group had already stated in black and white that it intended to make innovation one of its main pillars, so it is hardly surprising that it has now identified the aerospace sector as one of those worthy of investment.
The impact of high interest rates
Interest rates have been very high for several months, even in Europe.
Until July 2022, the ECB reference rate was 0%, whereas it has now risen to 4.5%.
Such high rates also mean higher interest rates for those who have taken out variable-rate loans, and these interest rates are collected by those who have granted these loans.
Banks are among the largest lenders, so they have been collecting more than expected for more than a year. In fact, from January 2023 they will be collecting much more than expected.
At this point they are obviously looking for useful and intelligent ways to invest what they are collecting, and apparently the aerospace sector is seen as one of the interesting ones.
In this sector, the leading private company in the world to invest in is SpaceX itself, so Intesa Sanpaolo’s choice seems relatively obligatory.
Intesa’s official press release points out that Elon Musk’s company is the only private company capable of launching a spacecraft into orbit and returning it to Earth, and in 2020 it will be the first private company to transport people to the ISS.