Antonio Gracias’s firm, Valor Equity Partners, a longtime supporter of Elon Musk and a current SpaceX board member, has decided to distribute a portion of its SpaceX shares directly to its limited partner investors. Instead of providing cash returns, Valor is transferring about 8.5% of its SpaceX holdings to these investors, according to an SEC filing. This move reflects the firm’s significant gain from its long-term investment in SpaceX, which has grown immensely in value over the years.

At the time of SpaceX’s recent IPO, Valor controlled over 500 million shares, making it the second-largest shareholder after Elon Musk, who possessed more than 6 billion shares. The shares given to limited partners are estimated by Bloomberg to be worth around $8.5 billion. Despite this large transfer, Valor will maintain ownership of over 460 million SpaceX shares, continuing its substantial stake in the company post-distribution.

The decision to give stock rather than cash returns to investors carries potential tax benefits for those receiving the shares. More importantly, it helps avoid flooding the open market with a large number of shares, which could depress SpaceX’s stock price. Since its IPO, SpaceX’s stock has seen a decline of about 10%, so controlling the supply of shares is crucial to stabilizing or supporting its market value.

This strategic distribution highlights the enduring confidence of one of Musk’s key backers in SpaceX’s future and underscores the firm’s innovative approach to managing investor returns. Valor’s careful handling of its SpaceX holdings illustrates the complexities of private and newly public company investments, especially ones as high-profile and high-value as SpaceX.