LONDON – Richard Branson’s Virgin Orbit hired bankers to help it go public this year through a special-purpose acquisition company, with the aim of evaluating the launch of satellites at up to $ 3 billion, according to people familiar with the subject.
The move represents Branson’s most recent effort to take advantage of a recent explosion of similar blank checklists. His Virgin Group acted on both sides of the SPAC craze: in 2019, he listed his space tourism company, Virgin Galactic Holdings Inc.,
SPCE 2.89%
by merging it with a SPAC, essentially a pool of money with a listing on the stock market.
Then, in February, a blank check company backed by Virgin said it would merge with 23andMe Inc. in a deal that valued the genetic testing company at $ 3.5 billion, including debt.
Branson’s two American space companies – Virgin Orbit and Virgin Galactic – were bright spots in an empire that would otherwise be damaged by the pandemic. The spread of the new coronavirus and the resulting blockages around the world have reached the airlines, tourism and fitness centers that are at the heart of the Virgin Group.
Virgin Orbit has contracted Credit Suisse Group AG and LionTree LLC, and is looking for a partner for the SPAC merger that can go public with a value ranging from $ 2.5 billion to more than $ 3 billion, according to people familiar with the subject.
The Branson company owns 80% of Virgin Orbit, with Mubadala Investment Co., the UAE’s sovereign wealth fund, holding the rest.
Private companies are switching to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and obtain a public listing. WSJ explains why some critics say that investing in these so-called blank check companies is not worth the risk. Illustration: Zoë Soriano / WSJ
The planned valuation would mark a significant jump from the $ 1 billion that the rocket startup was aiming for last year, from a previously planned private fundraiser. The company has not yet ruled out a private fundraiser, but is now focused on a SPAC, these people said.
Achieving the target assessment is far from guaranteed. Virgin Orbit has yet to reach an agreement with a specific SPAC to do a deal and then secure the additional foreign investment that normally comes with an SPAC merger.
Virgin Orbit is seeking a higher rating after a successful launch test of one of its satellite carrier rockets in January. This flight elevated the company to a small group of small satellite launch suppliers, capable of offering proven flight hardware.
The Southern California-based company uses a launch method unique to its competitors. A converted jumbo jet releases a rocket, which then fires and loads its payload of small satellites into orbit.
Virgin Orbit’s focus on merging with SPAC comes as investors increasingly bet on falling costs of access to business, tourism and scientific research spaces to fuel the sector’s growth.
SPACs have proven to be a popular route for space-related startups. In February, Astra Space Inc. agreed to merge with Holicity Inc.,
a SPAC backed by billionaire telecoms investor Craig McCaw, to list on the Nasdaq Stock Market. The partnership estimates the start of private rocket launch at $ 2.1 billion, including debt.
Momentus Inc., a technology developer to power small orbiting satellites, agreed in October to merge with the Stable Road Acquisition Corp.
, a SPAC, will go public on Nasdaq, valuing it at $ 1.2 billion, including debt. And in December, AST & Science LLC agreed to merge with New Providence Acquisition Corp.
, another SPAC. The deal valued the builder of a space-based cellular broadband network at $ 1.4 billion, including debt.
Write to Alistair MacDonald at [email protected] and Ben Dummett at [email protected]
Corrections and amplifications
Virgin Orbit is headquartered in Southern California. An earlier version of this article incorrectly called it a company based in South Carolina. (Fixed on March 12)
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Published in the March 13, 2021 print edition as ‘Branson explores a SPAC list for his satellite launch startup.’