Virgin Orbit, Richard Branson’s satellite launch start-up, is going public through a reverse merger with NextGen Acquisition Corp II, a special purpose acquisition company (SPAC), in a deal that has pushed its valuation up to $3.2 billion. The company was seeking a valuation of $1 billion just a year ago. This is also 213X more than the $15 million in revenue that Virgin Orbit expected to pull in this year.
The satellite launch company expects to raise about $483 million through its public listing at the end of the year. It plans to invest the funds in building its rocket manufacturing operations and space solutions business.
The commercial space business has seen an upsurge in recent times with big names like Jeff Bezos and Richard Branson making their maiden space trips in their respective start-ups. Elon Musk’s SpaceX, start-up Astra, Rocket Lab and Spire Global are all vying for a piece of the commercial market for space transportation.
Annual revenues from space-related business are projected to almost triple to $1 trillion by 2040, according to Morgan Stanley.
Virgin Orbit has taken a slightly different route for its space launches. It does not launch from ground sites. Instead, the company deploys a converted jumbo jet to release a rocket, which fires up and carries its payload of small satellites into orbit. This method has paved the way for sending payloads into orbit from runways all over the world, lowering the cost.
Virgin Orbit has rapidly moved into successful commercial operations with three launches in just thirteen months and a 100% success rate on revenue-generating missions.
Virgin Orbit’s revenue is not dependent on pricey space tourism, instead it is betting on an increase in commercial and military contracts from the likes of NASAs and US and foreign governments.
Satellite launchers are in great demand as satellites are increasingly being used for a variety of defense and commercial purposes. Though they need a great degree of precision and mechanics, many engineering challenges still need to be overcome. But Virgin Orbit has proved its worthiness.
The SPAC merger is being accompanied by a $100 million fully-committed PIPE (private investment in a public equity) led by strategic and institutional investors, including Boeing and AE Industrial Partners, in addition to existing Virgin Orbit investors and NextGen.
Branson’s Virgin Galactic space tourism venture went public via a SPAC merger almost two years ago.