Texas capital markets test IPO depth against growth

Against the backdrop of SpaceX’s long-awaited public debut last month and a potential reopening of the IPO window in capital markets, Texas is testing whether its economic strength can be matched by financial market depth.

That shift is accelerating as the state’s unique mix of industrial capacity and regulatory predictability mixes with emerging market infrastructure, including the newly launched Texas Stock Exchange in Dallas, as well as Nasdaq Texas and NYSE Texas.

The Texas Lawbook caught up with Carlos Pena of Texas Capital to discuss how extended private lifecycles, the evolving IPO windows and Texas’ legal and governance frameworks are reshaping capital formation.

Pena, who joined Texas Capital in August 2023 and manages its exchange-traded funds and mutual funds, offered his thoughts on what it will take for Texas to fully close the gap between where companies are headquartered and where their securities ultimately trade.

You’ve noted that Texas’ role in commercial aerospace capital markets is structural, not incidental. From what you see in the capital markets, has that shift already changed where deals get done (underwriters, advisers, anchor investors, etc. ) or is the infrastructure still catching up to the geography?

General sentiment is that Texas has already reshaped where deals originate, but it has not yet displaced where deals are executed. That distinction is critical. On the origination side, the shift is real and structural. The concentration of aerospace and defense activity in Texas — launch infrastructure, testing environments, engineering talent, and increasingly the location of company headquarters — is a signal that early and important capital decisions are being made locally. Companies are raising seed, venture and growth capital in closer proximity to their operations, and we are seeing more family offices, regional PE funds, and strategic investors anchored in Texas actively participating in those rounds.

However, on the execution side, capital markets infrastructure remains somewhat unchanged. The largest pools of underwriting capacity, institutional distribution, research coverage, and trading liquidity are still concentrated in New York with other cities playing an important role in specific markers or industries. As a result, IPO book-building still leans heavily on bulge-bracket balance sheets and large offerings are still syndicated through legacy distribution networks. The deepest institutional capital pools remain connected to the coasts.

What we are seeing today is a hybrid market structure where Texas drives narrative, growth and deal flow and traditional hubs still intermediate capital at scale. Over time, the imbalance should narrow as more A&D companies locate and scale in Texas and Texas, led by Dallas, becomes an increasingly significant global financial center.

The launch of the Texas Stock Exchange represents a material step toward closing this origination-to-execution gap. A Texas-domiciled exchange with independent clearing and settlement infrastructure directly addresses the structural constraint. It removes the operational assumption that a Texas-headquartered aerospace company must list on NYSE or Nasdaq and, more importantly, it creates a venue where institutional capital can be concentrated and deployed efficiently.

SpaceX was private for more than two decades before filing its prospectus. What does that extended private-market lifecycle do to the capital structure and ownership complexity that companies bring to the public markets. Does that complicate the IPO process in any way compared to what we saw 20 years ago?

The move toward extended private-market lifecycles fundamentally changes what companies look like when they arrive in public markets. Compared to 20 years ago, IPO candidates — particularly in technology — are more mature operationally but also more complex financially. From a capital structure standpoint, late-stage private companies often carry multiple preferred equity tranches with different rights (liquidation preferences) and return thresholds; convertible securities, SAFEs, structured secondaries or other investor groups; strategic investors such as corporates and sovereign funds with negotiated governance provisions.

This can create a layered and complex capital structure, where economic and control rights are not uniform. Before going public, companies often collapse or simplify preferred structures, align voting rights and resolve preferential liquidity features.

From an ownership perspective, private markets have effectively absorbed part of what used to be the public market’s role. Large crossover funds, hedge funds and sovereign investors often hold material stakes pre-IPO.

Texas’ policy framework (the new Business Court, governance flexibility, no state income tax) has clearly attracted companies to relocate and redomicile. From a CapM perspective, how durable is the Texas advantage?

In terms of the capital markets, this is not a one-time arbitrage but a repeatable, observable shift in geographic and firm behavior driven by structural factors — tax policy, regulatory consistency, and increasingly, governance infrastructure. What strengthens the durability case today is that Texas is moving beyond cost advantages into institutional advantages. The Business Court and statutory reforms are intentionally improving on Delaware’s playbook — building legal predictability that historically underpins long-term domicile decisions. The last decade of data suggests Texas’ advantage is already durable at the real-economy level.

The next phase of durability will depend on whether these legal advantages fully compound into a trusted legal and governance regime, which is what ultimately helps support long-term excess returns. Texas’ advantage has proven durable, not just opportunistic, and is generally reflected in realized after tax returns peer companies domiciled outside of Texas.

The Texas Lawbook is an online news publication focused on business law in Texas. For a longer version of this story, visit texaslawbook.net.