Richard Branson’s Virgin Orbit, which is backed by the Abu Dhabi sovereign wealth fund, has agreed to go public through a reverse merger with NextGen Acquisition Corp. II that will value the satellite-launch company at $3.2 billion.
Investors including Boeing Co. and AE Industrial Partners committed $100 million to Virgin Orbit through a private investment in public equity, according to a statement Monday. The merger is expected to provide the new company with $483 million in cash proceeds, bolstering its capital until regular launch operations – and more stable revenue streams – are expected in 2023.
Virgin Orbit’s existing shareholder base is comprised of Virgin Group (Virgin), Abu Dhabi’s Mubadala Investment Company (Mubadala), and management and employees.
Abdulla Shadid, executive director, Growth and M&A at Mubadala, said, “Virgin Orbit is a game changer for the small satellite launch and space solutions industry and its listing is expected to be yet another milestone in its continuing success story.
“Our investment in Virgin Orbit since its inception is a reflection of our confidence in the company’s ability to carve out a leading role in this sector. It also complements the broad objectives of the UAE’s national space strategy, as reflected in the recent successful ‘Hope’ satellite mission to Mars.”
The agreement with NextGen extends a wave of mergers with special-purpose acquisition companies. So-called blank-check companies like NextGen have raised $129 billion globally this year, more than last year’s record $84 billion haul, and the deals are playing an increasingly important role in funding new space ventures. A SPAC transaction involving another launch company, Rocket Lab USA, is set to close this week.
The Virgin Orbit merger is expected to close around year-end. The company will trade on the Nasdaq Stock Market under the ticker symbol VORB and keep the Virgin Orbit name.
Companies including Elon Musk’s Space Exploration Technologies Corp. are remaking the satellite-launch sector by lowering the cost of missions, in part by reusing rockets. That’s creating opportunities for new businesses in space. Virgin Orbit, which uses a customized Boeing 747 jumbo jet to launch its reusable rockets at about 35,000 feet above sea level, is part of that effort. The company was founded in 2017.
Dan Hart, chief executive officer of Virgin Orbit.
On June 30, Virgin Orbit delivered satellites for commercial and national-security customers. The company has $300 million in contracts, chief executive officer Dan Hart said on CNBC. He projected that it would conduct 18 launches in 2023, with the figure growing after that.
“We believe in the importance of the satellite launch market and the capabilities Virgin Orbit brings to the industry,” a Boeing spokesperson said by email.
Market Potential
SPAC transactions have become increasingly difficult to complete, as investors have grown more selective about the private investments in public equity that are typically part of the deals. Lackluster performance by companies that have gone public through SPACs as well as scrutiny from short sellers, activists and regulators also have created hurdles to getting deals done.
Another Branson-backed space company, Virgin Galactic Holdings Inc., went public through a SPAC deal in late 2019. The success of that transaction persuaded Branson to use a reverse merger with Virgin Orbit as well, he said on CNBC. Raising funds with a SPAC is more efficient and less time-consuming than a traditional public offering of stock, he said.
We've launched rockets to space from the wing of a jet. We've delivered commercial, civil, & nat'l security satellites to their target orbits from the end of a runway. And we're just getting started.
Now, we're planning to go public on @nasdaq. More: https://t.co/S7SiELgDY9 pic.twitter.com/8Aa50Jkfes
— Virgin Orbit (@VirginOrbit) August 23, 2021
Virgin Orbit can share expertise with Virgin Galactic, which plans to offer trips to space to the general – if well-heeled – public at $450,000 a pop. Branson and five Virgin Galactic employees made a roughly one-hour suborbital trip in July.
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