SpaceX and PayPay Achieve Landmark Simultaneous U.S. and Japan Public Offerings Through IPO/POWL Structuring

PayPay’s IPO/POWL

On March 12, 2026 (U.S. time), American Depositary Shares (“ADSs”) representing shares in PayPay began trading on the NASDAQ Global Select Market at a price of $16 per ADS.※4 Simultaneously, and as part of its IPO, PayPay conducted a public offering without listing (“POWL”) in Japan, offering its ADSs at the same $16 per ADS price. The offering strategy PayPay implemented represents the first instance of a Japanese company simultaneously conducting a public offering of ADSs abroad through a listing on the NASDAQ Global Select Market and in Japan through a POWL. Achieving simultaneous offerings in the U.S. and Japan presented a significant challenge in light of inconsistencies in the regulatory requirements and practices of the two countries. By using, among other structuring measures, the opt-out scheme described below, PayPay successfully achieved the simultaneous offerings, creating opportunities for investors in the U.S. and Japan to purchase PayPay’s ADSs concurrently.

SpaceX’s IPO/POWL

On May 20, 2026, SpaceX filed its registration statement for an IPO (“Form S-1”) with the U.S. Securities and Exchange Commission (“SEC”) and successfully listed shares of Class A common stock on the NASDAQ Global Select Market on June 12, 2026. Concurrently, SpaceX undertook public offering procedures in various other jurisdictions, including Japan, to allow investors in those jurisdictions to participate in the offering. Through this IPO, SpaceX raised a record-breaking $75 billion in capital. As with PayPay’s IPO, Japanese investors had an opportunity to participate in the bookbuilding process and purchase shares of SpaceX Class A common stock in Japan. Other important structuring considerations included flexibility with respect to pricing and offering size, as well as having the SRS become effective on the pricing date, but a detailed discussion of those considerations is beyond the scope of this newsletter due to space constraints.

THE POWL SCHEME IN JAPAN

A POWL allows a company pursuing a listing outside Japan, or its selling shareholder, to offer the company’s shares (or, in PayPay’s case, ADSs) to investors in Japan without undertaking the separate process of listing those securities on a Japanese exchange. In a POWL, the company, with support from its underwriters or sales agents in Japan, (i) prepares the required documentation (including a securities registration statement (“SRS”)※5), (ii) confidentially submits the documentation to the FSA (more specifically, to the Local Finance Bureau under the FSA) for review, (iii) officially files an SRS to publicly disclose the offering details and proceeds with the marketing of the shares to targeted investors, (iv) determines the preliminary price (typically expressed as a range), and (v) invites investors, based on the preliminary price, to submit non-binding indications of interest identifying the number of shares they would be willing to purchase (i.e., the bookbuilding phase). Once the bookbuilding phase ends, the company and the underwriters determine the final offer price and proceed to confirm orders and carry out the allocation process.

JAPANESE IPO PRACTICE

Achieving simultaneous public offerings in the U.S. and Japan presents numerous challenges given that each country has its own legal, regulatory, exchange, and market conventions, which are similar in some respects but quite different in others. One key difference concerns the setting of a subscription period in Japanese IPO practice that does not exist in U.S. practice. In Japanese IPO practice, companies conducting a public offering set and announce a subscription period (typically lasting four to six business days between the IPO price determination date and the listing date). After the SRS becomes effective upon clearance by the FSA, the company’s underwriters carry out a distinct share subscription procedure to ensure that investors, including those who have submitted indications of interest in the bookbuilding process, receive sufficient information (including the final pricing information) to make informed investment decisions.

During this subscription period, select investors can place orders for the shares to be listed at the determined IPO price. At the conclusion of this subscription period, the company’s underwriters allocate shares to the order-placing investors based on their orders, and settlement occurs upon listing. While this process ensures that investors can make informed investment decisions, it requires more time to complete than the integrated U.S. process, where allocation of shares among order-placing investors (i.e., investors who have placed orders to acquire specified quantities of shares at a contemplated price during the bookbuilding process) occurs immediately after the final IPO price and size are determined, and trading commences shortly thereafter. This difference in timing presented a challenge in achieving simultaneous public offerings in the U.S. and Japan. To address this challenge, an innovative opt-out scheme has been adopted for the POWLs conducted by SpaceX and PayPay.

SPACEX’S AND PAYPAY’S POWLS WITH OPT-OUT SCHEME

Under the opt-out scheme adopted for the SpaceX’s and PayPay’s POWLs, interested investors submitted non-binding orders during the bookbuilding phase and were given the opportunity to opt-out from their non-binding commitments by timely withdrawing their orders. Under the opt-out scheme, the company’s underwriters or sales agents in Japan solicit and receive orders during the bookbuilding phase when only preliminary terms (e.g., the preliminary IPO price range) are disclosed, and the IPO price has not yet been determined. Before the conclusion of the bookbuilding phase, investors can change their orders (i.e., increase or decrease the indicated number of shares and/or adjust their proposed purchase amounts, if applicable) or withdraw their orders entirely by notifying the underwriters or agents. Once the IPO price is determined and the SRS takes effect, investors may withdraw their orders no later than a predetermined deadline set by the underwriters or agents. Once the deadline passes, orders become final and the underwriters allocate shares based on investors’ final, unwithdrawn orders.

THE OPT-OUT SCHEME’S CONFORMITY WITH THE FIEA

The Financial Instruments and Exchange Act of Japan (“FIEA”) provides that investors are not legally bound by contracts for the acquisition of securities until the SRS takes effect. Thus, any investor who places an order before the SRS takes effect is allowed to withdraw the order without restriction or consequence until the SRS takes effect. Therefore, while investors may submit non-binding orders to purchase shares in the quantities and/or at purchase amounts indicated in their orders before the SRS takes effect, they must be given an opportunity to withdraw their orders before the subscription transaction becomes final and binding.

Furthermore, to ensure that investors can make informed investment decisions and have meaningful opportunities to withdraw their orders, the company, the underwriters, and the sales agents must clearly announce to potential investors: (i) the deadline for investors to withdraw or change their submitted orders, (ii) the possibility that the company may revise the preliminary price range or determine a price that is outside of such range, and (iii) the expected timing of the announcement of the determined offering terms and the deadline by which investors may withdraw their orders after the announcement. By treating investors’ final, unwithdrawn non-binding orders as valid orders and issuing notifications of the allocations after the notified deadline, the opt-out scheme allows investors to make substantive investment decisions after reviewing the SRS and the determined offering terms, thereby facilitating informed decision-making by investors.

DISCLOSURE AND COORDINATION WITH THE U.S. IPO PROCESS

For each of SpaceX’s and PayPay’s IPOs, investors in Japan who submitted non-binding orders were notified of details of the POWL with opt-out scheme, including their right to amend or withdraw their orders up until the announced deadline on the pricing date, and that after such deadline all unwithdrawn orders would become final and the underwriters would allocate shares based on investors’ final, unwithdrawn orders. Because the POWL with opt-out scheme in both cases aligned with their respective integrated U.S. IPO procedures in terms of timing, they enabled PayPay and SpaceX to carry out the U.S. IPO and Japan POWL concurrently.

The timeline for aligning SpaceX’s POWL in Japan with its U.S. IPO is described generally in the table below.※6