On the eve of Anthropic (ANT.US) IPO: $19 billion in passive buying on the way, will “SpaceX-style” index arbitrage be repeated?

According to Zhitong Finance APP, when the artificial intelligence company Anthropic (ANT.US) begins trading after its expected IPO next week, the stock’s performance in the initial weeks will mainly depend on who has to buy, rather than who wants to buy. Investors are studying the process of SpaceX’s successful listing this June for clues.

Elon Musk’s SpaceX (SPCX.US) rewrote the traditional playbook for mega-cap IPOs: Major US index providers like Nasdaq rewrote their inclusion rules to ensure a large pool of passive capital would buy shares within the first 15 days after listing. Investors expect Anthropic to experience the same dynamic. The developer of the Claude chatbot plans to issue 825 million shares at $70 to $78 each, raising up to $64.4 billion and valuing the company at up to $1.4 trillion.

In the past, leading index providers usually waited weeks or months after a company listed before adding it to benchmark indexes. But, like SpaceX, Anthropic will be included in at least six major indexes—such as the FTSE USA Index, S&P Total Market Index and Nasdaq 100—within 5 to 15 days of its listing.

“Anthropic is a mirror image of the SpaceX IPO. In this sense, it has the same index-related drivers as SpaceX in the first 15 days of trading,” said Carsten Hesse, Head of Index Events at Berenberg in London.

London-based index rebalancing analytics firm Intropic estimates that passive demand from index-tracking funds will account for about 28%, or around $19 billion, of Anthropic’s issued shares. Funds rebalancing for indexes and hedge funds will bid to buy shares in advance to establish positions before this anticipated passive demand materializes.

SpaceX reserved one-fifth of its $75 billion IPO for retail investors, more than double the normal rate, with its valuation approaching $1.75 trillion. Anthropic is doing the same.

Together, index funds and retail investors took nearly half of SpaceX’s IPO shares, and other fund managers built positions in anticipation of this demand. This created upward momentum for the small portion of the shares actually listed in the initial public offering. Likewise, the shares offered in Anthropic’s IPO account for only about 6% of its total outstanding shares.

Both SpaceX and South Korean firm SK Hynix, which listed on Nasdaq this July, saw their share prices jump sharply on the third day post-listing—the day options trading began, as speculators hedged derivatives positions by buying the underlying stock. Analysts say Anthropic’s stock is also likely to see similar early buying.

“You don’t wait until Day 5, Day 10, or Day 15 to see index upgrades or true inclusion happen,” Hesse said. “As we saw with SpaceX, people are buying in advance.”

Index Trading Game Changer

By the third day, SpaceX’s stock had risen a cumulative 50% from its Day 1 opening price of $150, and remained well above the $135 IPO price throughout the first 15 days. Afterwards, shares fell as investors began to prepare for the first lock-up expiration, when employees and other pre-IPO shareholders were allowed to sell.

Intropic’s stock analyst Ruben Pathmanathan said that buying activity with low price elasticity drove this rally. “SpaceX could become a model because several market forces converged around the IPO: index inclusion, passive demand, and a highly concentrated float. Together, these determined the way the stock was priced and traded in the opening days.”

The Anthropic trajectory may be slightly different: it allows employees holding about 15% of the company’s equity to sell some shares on the first day of listing.

Anthropic is also raising $26 billion from cornerstone investors like Google (GOOGL.US), Nvidia (NVDA.US) and AMD (AMD.US) through a separate private placement, with those shares not subject to a lock-up period.

The new index rules and massive capital flows have become game changers for funds that profit from index rebalancing trades. “This is an evolution of the market,” said Brian Hartigan, Head of Global ETF and Index Investments at Invesco, referring to how these ultra-large IPOs accumulate huge private shareholdings even before listing.

Traditionally, index rebalancing trades were constrained by IPO size—too many funds scrambling early while passive demand was limited. For mega IPOs, this is less of an issue.

“This is the type of opportunity the arbitrage community likes because crowded risk is relatively limited,” said Celia Fseil, Head of Equity Market Neutral Strategy at Candriam.

It was reported that Millennium Management’s two teams engaged in index event trading made $3.7 billion in June. Millennium has not confirmed this.

“If you’re doing index rebalancing, these might be the kind of events you only see a few times in your life,” said Bill Park, Chief Investment Officer of Altisma Capital Management in Connecticut.