His title is Antonio Gracias, a good-looking personal fairness investor from Detroit. The 2 met via the Silicon Valley net on the flip of the century, and shortly Gracias—at 55, only one 12 months older than Musk—lent Musk $1 million in his early days at Tesla, when the corporate was teetering on the sting of chapter.
The 2 have been best buddies ever since. Gracias was a groomsman at Kimbal Musk’s wedding ceremony, the households have vacationed collectively, spent the vacations collectively, and even traveled to David Copperfield’s personal island within the Bahamas.
And Gracias trailed Musk via all of his ventures. He’s sat on the boards of Tesla—the place he spent eight years as lead unbiased director—SpaceX, SolarCity, Neuralink, and The Boring Firm. His firm, Valor Fairness Companions, was certainly one of Tesla’s earliest institutional buyers and has put cash into almost each Musk firm.
Gracias even adopted Musk into the federal authorities, taking a job on the Division of Authorities Effectivity earlier than resigning in July amid scrutiny over managing $2 billion in public pension belongings whereas serving as a authorities worker.
Now, with SpaceX getting ready for the most important IPO in historical past, Gracias’ loyalty is about to repay.
His Valor entities collectively maintain greater than 500 million shares of SpaceX Class A inventory—roughly 7.3% of the corporate, making him the second-largest particular person shareholder after Musk. On the $1.75 trillion valuation Bloomberg and Reuters have reported SpaceX is focusing on, Gracias’ stake will likely be value round $90 billion. At $2 trillion, it climbs previous $140 billion. Both method, the IPO will make him one of many 50 wealthiest individuals alive.
He’s also incomes it.
Three leases, $20 billion, one board member
Final October, SpaceX’s S-1 exhibits, an xAI subsidiary known as CTC signed an tools lease settlement with Valor for AI infrastructure {hardware}—particularly, the GPUs wanted to energy xAI’s knowledge facilities. (xAI was a separate Musk firm on the time; SpaceX absorbed it in February.) In January, CTC signed a second lease with Valor. In April, a 3rd.
Collectively, the three agreements obligate the corporate to pay Valor near $20 billion over their phrases. And SpaceX ensures the funds—that means if the xAI subsidiary can’t cowl them, SpaceX itself is on the hook. That assure is uncommon on its personal: It suggests xAI couldn’t get this type of financing on its personal credit score, and wanted its guardian firm to step in. Certainly, the brand new submitting exhibits xAI was ridden with debt, together with secured senior notes at a 12.5% rate of interest—distressed-borrower pricing that exhibits the corporate was struggling to entry typical financing routes.
As soon as SpaceX goes public, all that legal responsibility transfers to public shareholders, who will inherit billions in obligations from a deal struck whereas the corporate was nonetheless personal.
Up to now, the Valor entities have collected roughly $885 million from the leases in 2025, and one other $857 million in simply the primary two months of 2026.
The construction is uncommon sufficient that SpaceX’s auditor, PwC, refused to deal with it as a standard lease, and as a substitute known as it a “failed sale leaseback.” In a typical sale-leaseback, one get together sells an asset to a different, then leases it again. Right here, that meant CTC—the xAI subsidiary—”offered” the GPUs to Valor, then leased them again to be used in its personal knowledge facilities. For the deal to depend as an actual sale, Valor wanted to truly acquire management of the GPU. However the phrases of the association, in PwC’s view, meant CTC retained efficient management of the belongings, making Valor identical to an everyday lender, with the GPUs serving as collateral.
In different phrases, SpaceX and xAI structured the offers in a method that, if accepted, would have saved the financing off SpaceX’s steadiness sheet. However it seems as if PwC refused. The auditors concluded the transactions had been loans in substance, not leases, and compelled SpaceX to file the debt anyway. The $9 billion now sits on SpaceX’s steadiness sheet as related-party debt payable to the firm of certainly one of SpaceX’s personal administrators.
Neither Valor Fairness Companions nor SpaceX responded to Fortune’s request for remark.
‘That’s the worst’
The association alarmed two prime company governance consultants who Fortune spoke with.
Nell Minow, a chair of ValueEdge Advisors, known as the Valor leases “deeply troubling”—each for what they recommend about SpaceX’s numbers and for what they recommend about its governance. Requested the place the association falls on the spectrum of related-party offers she’s seen throughout 4 many years of company governance work, Minow didn’t hesitate.
“That’s to me, that’s the worst,” she mentioned. “They wouldn’t know an arm’s-length transaction in the event that they noticed one.”
An “arm’s-length transaction” is the usual company governance jargon for a easy take a look at: Would the phrases maintain up if the 2 events had been strangers, with no shared curiosity in reducing one another a favor? It’s how public firms show to buyers that insiders aren’t quietly enriching themselves via firm enterprise—and it’s precisely that assurance that SpaceX’s S-1 doesn’t give for the Valor offers, she suggests.
Robert Willens, an accounting and tax knowledgeable at Columbia Enterprise Faculty, noticed that very same hole. Public firms usually embrace a sentence of their related-party disclosures promising the phrases are “no much less favorable” than what an unaffiliated get together would have gotten. SpaceX makes use of precisely that language within the part of the S-1 describing its dealings with Tesla, one other Musk firm. However it doesn’t use it within the part describing the Valor leases.
“In the event that they don’t say it explicitly, it’s a must to be led to imagine that possibly they’re not being as cautious as they’re within the first settlement, and that they very nicely is perhaps agreeing to phrases which can be much less favorable than they’d be with an unrelated get together,” Willens mentioned. “They know the best way to say it after they wish to say it.”
If the Valor phrases aren’t arm’s-length, Willens mentioned, the lease funds could perform as a “disguised dividend”; more money flowing to Gracias not as a result of the GPUs are value what Valor is charging, however as a result of he’s a robust insider. The S-1 also doesn’t disclose whether or not Gracias recused himself from the board’s approval of any of the three offers, an omission each Minow and Willens mentioned is notable for a $20 billion related-party transaction.
Public capital, personal management
Minow mentioned the association is typical of SpaceX, which desires “the entry to capital of a public firm” however “the management of a personal firm.” It would truly be a “managed firm” underneath Nasdaq guidelines—exempt from necessities {that a} majority of its board be unbiased. Gracias himself is being seated on the compensation and nominating committee. The corporate reincorporated in Texas in 2024 after Musk personally lobbied state legislators to weaken shareholder protections; shareholder disputes at the moment are topic to obligatory arbitration; and underneath SpaceX’s constitution, Musk can solely be faraway from his management positions by holders of Class B inventory, the vast majority of which he controls.
And all of it is occurring simply as Nasdaq has modified its guidelines to make sure hundreds of thousands of Individuals will personal SpaceX whether or not they wish to or not. In March, the alternate rolled out a brand new “Quick Entry” rule letting massive IPOs be part of the Nasdaq 100 after simply 15 buying and selling days; down from a typical interval of three months to a 12 months. For comparability, Fb waited seven months, whereas Airbnb waited a 12 months, and Tesla waited three. Reuters reported that quick index inclusion was a situation of SpaceX’s Nasdaq itemizing.
The consequence: Each fund monitoring the Nasdaq 100—together with the $385 billion Invesco QQQ and trillions in different ETFs and retirement accounts—will likely be compelled to purchase SpaceX inventory weeks after it lists, no matter worth or governance. Goldman Sachs analysts estimate the rule change could set off as much as $60 billion in compelled shopping for throughout the Nasdaq 100 ecosystem.
“I want they had been pretty much as good at engineering,” Minow mentioned of SpaceX, “as they’re at reducing off each potential avenue of unbiased oversight.”
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