Virgin Orbit partners with Boeing in a $3.2 billion Spac deal

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Aerospace Industry Update

Boeing will become an investor in Richard Branson Satellite Launch Company Virgin Orbit Company, which merged with a special purpose acquisition company and listed in a transaction valued at more than 3 billion U.S. dollars.

Virgin Orbit, spun off from Branson’s Virgin Galactic Travel, will merge with NextGen Acquisition II, a blank check entity co-founded by the former Goldman Sachs banker, to be listed on the Nasdaq exchange in New York.

This transaction will bring up to 483 million U.S. dollars in new capital for Virgin Orbit, including a $100 million public equity private investment or Pipe, led by the US aerospace giant Boeing and aerospace commercial investor AE Industrial Partners. Virgin Orbit intends to use the proceeds to expand its services and accelerate launches, with six expected next year.

Following the deal between Earth observation companies Planet Labs and Spire Global earlier this year, Virgin Orbit is the latest company to capitalize on the growing interest of investors in rapidly expanding space opportunities. Both merged with Spacs and went public at a multi-billion dollar valuation.

Virgin Orbit was founded in 2017 when Elon Musk’s SpaceX began to reduce launch costs by using reusable rockets and began to open up space to private companies. Morgan Stanley predicts that by 2040, the annual revenue of the aerospace industry will grow from USD 350 billion in 2016 to more than USD 1 trillion.

Unlike SpaceX, Virgin Atlantic chose to focus on horizontal launch services, using modified 747 aircraft as mobile launchers and reusable first stages. After flying into the upper atmosphere on the 747, Virgin’s LauncherOne rocket was sent into space, carrying several smaller satellites each weighing approximately 300 kilograms.

The organization has sent satellites into space for NASA and won a US military contract. Virgin Orbit is also one of the companies chosen by the British government to help boost its ambitions to launch satellites from the British spaceport starting next year.

The transaction valued Virgin Orbit at an implied pro forma enterprise value of approximately US$3.2 billion. It is expected to close around the end of the year.

After the transaction is completed, Branson’s Virgin Group will hold approximately 68% of Virgin Orbit. Abu Dhabi’s sovereign wealth fund Mubadala Investment Company is an existing investor in Virgin Orbit and will hold approximately 17% of the shares, while Pipe and other private investors will hold approximately 15% of the group. Boeing’s shares were not disclosed.

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