Richard Branson plans next SPAC deal, this time for Virgin Orbit

LONDON – Richard Branson’s Virgin Orbit has hired bankers to help it go public this year through a special-purpose acquisition company, with the goal of a satellite start-up valuation of up to $ 3,000. million, according to people familiar with the matter.

The move represents Branson’s latest effort to capitalize on a recent boom in similar quotes with blank checks. His Virgin Group has played on both sides of the SPAC craze: In 2019, it included his space tourism company, Virgin Galactic Holdings. Inc.,

SPCE 2.89%

merging it with a SPAC, essentially a money reserve with a public listing.

Then in February, a Virgin-backed blank checking company 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, have been bright spots in an empire that was otherwise hit hard by the pandemic. The spread of the new coronavirus and the resulting lockdowns around the world have affected the airline, tourism and gym businesses that are the core of the Virgin Group.

Virgin Orbit has hired Credit Suisse Group AG and LionTree LLC, and is seeking a SPAC merger partner that could go public with a value ranging from $ 2.5 billion to more than $ 3 billion, according to people familiar with the matter. .

Branson’s company owns 80% of Virgin Orbit, with the remainder owned by Mubadala Investment Co., the sovereign wealth fund of the United Arab Emirates.

Private companies are flooding into Special Purpose Acquisition Companies, or SPACs, to avoid the traditional IPO process and obtain a public listing. WSJ explains why some critics say investing in these so-called blank check companies is not worth the risk. Illustration: Zoë Soriano / WSJ

The target valuation would mark a significant jump from the $ 1 billion that the rocket startup had been targeting 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.

Reaching the target valuation is far from guaranteed. Virgin Orbit has yet to reach an agreement with a specific SPAC to make a deal and then secure the additional outside investment that usually comes along with a SPAC merger.

Virgin Orbit is seeking a higher valuation after a successful test launch in January of one of its satellite-carrying rockets. That flight turned the company into a small group of small satellite launch providers capable of offering flight-tested hardware.

The Southern California-based company uses a unique launch method from its competitors. A converted jumbo jet launches a rocket, which then ignites and carries its payload of small satellites into orbit.

Virgin Orbit’s focus on a merger with a SPAC comes as investors are increasingly betting on falling costs of accessing the space for business, tourism and scientific research to fuel industry 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 telecommunications investor Craig McCaw, to be listed on the Nasdaq Stock Exchange. The alliance values ​​the privately owned rocket launch startup at $ 2.1 billion, including debt.

Momentus Inc., a developer of technology to power small satellites into orbit, agreed in October to merge with Stable Road Acquisition. Corp.

, a SPAC, to be listed on Nasdaq, valued 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 based in Southern California. An earlier version of this article incorrectly called it a South Carolina-based company. (Corrected March 12)

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It appeared in the print edition of March 13, 2021 as ‘Branson Scouts a SPAC List for Its Satellite Launch Startup’.


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