Redwire Space going public through SPAC after year of acquisitions

Space infrastructure conglomerate Redwire Space is preparing to go public, announcing on Thursday that it is the last in a series of space companies to merge with a SPAC.

Redwire, formed last year by private equity firm AE Industrial Partners, is merging with the special purpose acquisition company Genesis Park, which trades under the ticker GNPK. The deal is expected to close at the end of the second quarter, with the merger resulting in the listing of Redwire on the New York Stock Exchange.

A SPAC is essentially a shell company that raises money through an initial public offering to acquire another company. Genesis Park shares rose more than 5% in the pre-market after the announcement, compared to the previous close of $ 9.87 per share.

“When you look around the industry now, you have many of the oldest traditional space players and many of these new players, many of them are pre-revenues,” Redwire President and CEO Peter Cannito told CNBC.

“Redwire is a kind of hybrid: we are offering that middle ground of tremendous flight heritage, but also disruptive technologies.”

The company is focused on space infrastructure, which it estimates is currently a $ 15 billion market.

The Redwire group of companies includes technologies such as navigation sensors, solar panels, implantable structure, manufacturing in space and robotic arms.

The conglomerate expects to add about $ 170 million in cash to its balance sheet with the merger. This would include revenue from a round of PIPE – or private investment in public shares – of $ 100 million, with the participation of investors Senvest Management and Crescent Park.

The merger values ​​Redwire at a $ 615 million business valuation, according to the companies. Cannito noted that AE Industrial Partners “will remain significantly invested” after the merger, as its largest individual shareholder.

Since AE formed Redwire last June, the company has been on a steady wave of acquisitions.

Redwire first acquired satellite component company Adcole Space and aerospace company Deep Space Systems and then acquired Made In Space, a 3D printing specialist.

The conglomerate also acquired the satellite technology company Roccor, the engineering service LoadPath, the modular spacecraft builder Oakman Aerospace and the satellite engine company Deployable Space Systems.

In all, according to Redwire, the combined management teams bring more than 50 years of space experience, with more than 150 missions.

“We take a very different approach to the market here, combining different companies with an extraordinary flight heritage,” said Cannito.

These businesses “are used to being the primary mission partner for organizations that are deploying space-based resources,” he added, whether those partners are NASA, the Pentagon or others.

Redwire believes that more business can happen, said Cannito, noting that going public and “having this public equity as a currency significantly increases our attractiveness as an acquisition platform”.

“This allows us to be opportunistic to continue our proven track record of mergers and acquisitions,” said Cannito. “I think we are going to look for bigger goals and that gives us the opportunity, with the flexibility to do that as needed.”

Redwire generated revenue of $ 119 million last year, which it expects to grow to $ 163 million in 2021. The company predicts that this will increase to more than $ 1.4 billion in revenue by 2025, which Cannito said is based on in your products.

“Dollars can vary from government to commercial, and then our profile, in terms of our customer mix, will revolve along with it. So it gives us a lot of staying power. It allows us to be flexible and adjust and transform as the market changes, “said Cannito.

Redwire has positive cash flow and expects to see its profitability continue and grow to nearly $ 200 million in free cash flow by 2025.

“Our strategy is to be the main mission partner,” said Cannito.

Cannito also emphasized reducing the cost of access to space, as well as the growing number of rocket builders launching themselves into orbit, as an additional catalyst.

“We are very excited and have a lot of respect for what SpaceX has done with the introduction of the reusable economic launch. We are also excited about all the other launch vendors that have entered this space and have done so now, and as a result of increasing competition, reducing the launch cost. There are many options now, “said Cannito.

“I believe there is a direct correlation between reductions in launch costs and the demand for space infrastructure,” he added.

Overall, Cannito introduced his company as a company that is in the middle of the space economy, which has grown to more than $ 420 billion.

“When space wins, Redwire wins,” said Cannito.