It’s not uncommon for large companies doing big deals to make demands of their bankers and lawyers.
But Elon Musk has made a particularly bold demand of his Wall Street advisers ahead of the initial public offering of his company SpaceX.
Mr. Musk is requiring banks, law firms, auditors and other advisers working on the I.P.O. to buy subscriptions to Grok, his artificial intelligence chatbot that is part of SpaceX, according to four people with knowledge of the matter, who were not authorized to speak publicly about confidential discussions.
Some of the banks have agreed to spend tens of millions on the chatbot and they have already started integrating Grok into their I.T. systems, three of the people said.
Mr. Musk and a SpaceX spokesman did not respond to requests for comment.
For almost any major initial public offering, banks find ways to ingratiate themselves with the company going public, as well as its chief executive. But after several years with few significant public offerings coming to market, Wall Street has been salivating for a deal like SpaceX, which is forecast to be one of the largest in history.
The I.P.O. is expected to raise more than $50 billion at a valuation above $1 trillion, which means the banks could generate fees in excess of $500 million for advising on the deal.
Mr. Musk’s ability to secure business from the banks for his A.I. chatbot also shows the enormous sway of the world’s richest man over a banking sector clamoring for his business now and into the future.
The banks’ purchases of Grok subscriptions were not merely good will gestures, according to three people with knowledge of the arrangements. Mr. Musk insisted that they purchase the chatbot services. He has also asked the banks to advertise on X, his social media site that is also owned by SpaceX, but was less adamant about that request, according to two of those people.
For now, five banks are expected to work on the offering — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley. The law firms Gibson Dunn and Davis Polk are also advising on the deal.
Mr. Musk’s agreement with banks is a big score for SpaceX, which merged with xAI in February and whose Grok is a distant fourth in the artificial intelligence race behind OpenAI’s ChatGPT, Claude and Google’s Gemini.
Mr. Musk has marketed Grok as the antidote to political correctness and said that his chatbot would not be “woke,” unlike its competitors. In recent months, Grok has been mired in controversy after sharing antisemitic content and praise of Adolf Hitler as well as generating nonconsensual sexualized images of women and girls. Some countries, including Indonesia and Malaysia, have banned Grok, while others have opened investigations into its spread of sexualized material.
Despite its problems, Mr. Musk has continued to promote the chatbot, regularly urging his more than 237 million followers on X to “try Grok.” As of noon on Friday in New York, he had posted 18 times that day about the chatbot, which had launched a new version of its app on Thursday.
“Grok & xAI are definitely improving faster than any other AI,” read one message on X that Mr. Musk reposted.
Grok generates revenue mostly from individuals rather than from businesses. The subscriptions from the banks will give the so-called enterprise part of the artificial intelligence arm a boost ahead of SpaceX’s I.P.O.
In its most recent financial report to investors ahead of the SpaceX merger, xAI reported roughly $1 billion in revenue from its artificial intelligence operations, according to a person who viewed the results. The company didn’t indicate how much came from its consumers or business customers.
Starlink, SpaceX’s satellite internet service, is the company’s crown jewel, generating billions of dollars in so-called free cash flow from its operations, according to the person familiar with its financials. Financial documents obtained by The New York Times showed that Starlink recorded about $8 billion in revenue in 2024.
For months, bankers have been in SpaceX’s Los Angeles-area offices helping the company draft the I.P.O. filing.
It’s unclear which bank, if any, will have the lead role in the deal, a position that carries prestige and often an outsize share of the fees, according to two people familiar with the negotiations. SpaceX, which confidentially filed I.P.O. paperwork with the Securities and Exchange Commission earlier this week, left the names of banks off the filing, one of the people said.
Ryan Mac and Lauren Hirsch contributed reporting.
Maureen Farrell writes about Wall Street for The Times, focusing on private equity, hedge funds and billionaires and how they influence the world of investing.
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