LONDON – Richard Branson’s Virgin Orbit has hired bankers to help it float through a special takeover company this year, aiming for a satellite launch estimate of up to $ 3 billion, according to people familiar with the case.
The move represents Mr. Branson’s latest attempt to capitalize on a recent boom in similar blank offerings. His Virgin Group has been 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 listed money pool.
In February, a Virgin-backed blank check company said it would merge with 23andMe Inc. in a deal that valued the genetic testing company at $ 3.5 billion, including debt.
Mr. Branson – Virgin Orbit and Virgin Galactic – were bright spots in an empire otherwise troubled by the pandemic. The spread of the novel coronavirus and resulting lockdowns around the world have hit the aviation, tourism and fitness companies that are at the heart of Virgin Group.
Virgin Orbit has hired Credit Suisse Group AG and LionTree LLC and is looking for a SPAC merger partner who could make it public with a value ranging from $ 2.5 billion to more than $ 3 billion, according to people familiar with the matter.
Mr. Branson owns 80% of Virgin Orbit, while Mubadala Investment Co., the United Arab Emirates’ sovereign wealth fund, owns the rest.
Private companies are transitioning to special acquisition companies, or SPACs, to bypass the traditional IPO process and get a public listing. WSJ explains why some critics say investing in these so-called blank checks is not worth the risk. Illustration: Zoë Soriano / WSJ
The targeted valuation would represent a significant jump from the $ 1 billion the rocket startup had targeted last year, from a previously planned private fundraiser. The company still hasn’t ruled out private fundraising, but is now targeting a SPAC, these people said.
Achieving the intended valuation is far from guaranteed. Virgin Orbit has yet to reach an agreement with a specific SPAC to close a deal and then secure the additional outside investment usually associated with a SPAC merger.
Virgin Orbit is aiming for a higher rating after a successful January test launch of one of its satellite-carrying missiles. That flight brought the company into a small group of small satellite launch providers capable of offering proven hardware.
The Southern California-based company uses a launch method that is unique from its competitors. A converted jumbo jet releases a missile, which then fires and puts its payload from small satellites into orbit.
Virgin Orbit’s focus on merging with a SPAC is as investors are increasingly betting on the declining cost of access to space for business, tourism and scientific research to drive the growth of the industry.
SPACs have proven to be a popular route for space startups. In February, Astra Space Inc. in with a merger with Holicity Inc.,
a SPAC backed by billionaire telecommunications investor Craig McCaw, to list on the Nasdaq Stock Market. The link values the private rocket-launch startup at $ 2.1 billion including debt.
Momentus Inc., a developer of technology for putting small satellites into orbit, agreed to merge with Stable Road Acquisition in October Corp.
, a SPAC, to go public on Nasdaq and value 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 space-based mobile broadband network builder at $ 1.4 billion including debt.
Write to Alistair MacDonald at [email protected] and Ben Dummett at [email protected]
Corrections and reinforcements
Virgin Orbit is based in Southern California. An earlier version of this article incorrectly referred to it as a South Carolina-based company. (Corrected on March 12)
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Appeared in the March 13, 2021 print edition as “ Branson Investigating an SPAC Listing for Its Satellite Launch Startup. ”