Race to Space Heats Up: Virgin Orbit to Go Public

Virgin Orbit Inks SPAC Deal

Virgin Orbit, the satellite-launch startup owned by mogul Richard Branson, is going public via a SPAC deal. The transaction with NextGen Acquisition Corp. II (NGCA) values Virgin Orbit at $3.2 billion. Boeing (BA) and private equity firm AE Industrial Partners are participating in the deal via a $100 million “private investment in a public equity” transaction, also known as a PIPE.

The listing of Virgin Orbit later this year comes as investor interest in space is climbing. As the cost to send people to space declines, investors are betting it will usher in an entirely new industry, generating billions of dollars. Virgin Group owns 80% of Virgin Orbit, which is one of the leaders in launching small satellites to space. Firefly and Rocket Labs are also in the race.

Boeing Looks to Beef Up

Boeing’s investment comes as the company has been struggling with its own space program. Faulty valves on its Starliner spacecraft delayed an August test launch. This pushed back its original goal of sending a manned spacecraft to the International Space Station. The aircraft manufacturer sees the investment in Virgin Orbit as a strategic way to get more exposure to the growing industry. It is already an investor in Virgin Galactic (SPCE), Bronson’s spaceship company.

Virgin Orbit is among a handful of satellite startups to successfully complete launches, proving its technology works. The satellite company is expected to earn $483 million from the deal. Once the merger closes Virgin Orbit will trade on the Nasdaq under (VORB).

Noteworthy Pipeline

Virgin Orbit was spun out of Virgin Galactic in 2017 and delivered its first payload to space in January, bringing 10 satellites to orbit for NASA. It also landed a $35 million deal with the US Space Force last year to supply launches to the US military. SPAC deals have been an increasingly popular way for startups or privately held companies to go public. Blank check companies sometimes focus on more budding investment opportunities including space and autonomous driving.

According to public filings posted yesterday, Virgin Orbit has roughly $300 million worth of contracts in the pipeline. Moreover, the company is projecting to generate more than $2 billion in sales annually by 2026. Investors will be closely watching how this company fits into the growing space sector.

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