Sir Richard Branson is in advanced talks on a multibillion-dollar merger to bring Virgin Orbit, his satellite launch company, to US public markets.
Sky News may reveal that Virgin Orbit is close to finalizing a deal to combine with NextGen Acquisition II, a Special Purpose Acquisition Company (SPAC) created by George Mattson, a former Goldman Sachs banker.
Sources said over the weekend that NextGen II was in exclusive talks with Sir Richard’s Low Earth Orbit satellite business, 80% owned by the tycoon’s Virgin Group empire.
Mubadala, Abu Dhabi’s sovereign wealth fund, owns the remaining 20% of the shares of Virgin Orbit.
A definitive deal valuing Virgin Orbit at around $ 3 billion (£ 2.1 billion) could be announced in the coming weeks, according to insiders.
The conclusion of a PSPC merger would represent further justification for Sir Richard’s efforts to build a multibillion-dollar business empire in the burgeoning space technology sector.
In 2019, it merged Virgin Galactic, its space tourism operation, with Social Capital Hedosophia, another SPAC, in a deal that heralded the continued deluge of so-called “blank check” companies.
SPACs raise funds from investors to secure an unidentified acquisition, with hundreds of vehicles created by famous financiers, businessmen and sponsors over the past two years.
Virgin Orbit has been seeking a PSPC deal for several months and has begun talks with several potential partners, according to people familiar with the process.
The choice of NextGen makes sense, as Mr. Mattson is a director of Virgin Galactic and is an experienced aviation industry insider, having also served as a director of Delta Air Lines for almost nine years.
Previously, he was a partner at Goldman and worked with clients in the general industrial sector for a decade.
Virgin Orbit is part of a rapidly growing industry focused on launching satellites for commercial and government customers.
The company received another burst of publicity this week when Boris Johnson was pictured in front of one of his LauncherOne rockets at the Newquay Spaceport ahead of the G7 summit.
In January, it launched ten small satellites into space from its California base, with the next launch slated for later this month.
Rocketlabs, a bigger rival to Virgin Orbit, is the only other commercial small satellite operator to have taken this step.
The inaugural launch of Sir Richard’s business from the Cornwall site could take place as early as the end of next year.
It also plans to launch from California, Guam and Japan, and is considering other launch sites around the world.
Virgin Orbit was formed out of Virgin Galactic four years ago and is now headed by chief executive Dan Hart, a former Boeing executive.
He is deploying a new launch system using a converted Virgin Atlantic passenger plane that is now called Cosmic Girl.
Morgan Stanley analysts predicted that the global space industry could be worth more than $ 1 billion by 2040.
Rapid growth is expected thereafter, as commercial use of satellites expands to meet demand from communications and other technology companies.
This week, Seraphim Capital confirmed a Sky News report that it was planning a £ 250million IPO in London, after backing a number of space ‘unicorns’ including Arqit, a UK quantum encryption firm. .
Arqit itself has just unveiled its intention to go public via a SPAC, with Virgin Orbit among the investors in the deal, also having entered into an alliance as an Arqit satellite launch partner.
Arqit said Friday it has reached a deal with six governments to launch a series of federated quantum satellites.
David Williams, the businessman who created Arqit, was also the founder of Seraphim and established himself as one of the most influential executives in the UK space industry.
Among the remaining questions relating to Virgin Orbit’s PSPC merger will be the size and backers of its so-called PIPE – referring to the private investors in public capital who will help fund the operation.
For Sir Richard, the crystallization of a $ 2.5 billion paper windfall by bringing Virgin Orbit into the New York stock markets will add another significant chunk to his wealth.
The businessman has sold hundreds of millions of pounds of Virgin Galactic shares over the past 15 months to invest in his consumer-facing businesses, but retains an estimated 25% stake valued at over $ 2 billion. dollars based on Friday’s closing price.
Sir Richard’s $ 4.5 billion space-related paper fortune has helped overcome the impact of the pandemic on his other consumer and travel businesses.
Virgin Active and Virgin Atlantic have narrowly avoided bankruptcy since the start of the coronavirus epidemic, with Sir Richard among creditors having injected substantial sums to keep them afloat.
At one point last year, he pleaded with the UK government to step in to support Virgin Atlantic and warned that he may even seek to mortgage his private Caribbean island, Necker, in order to raise funds.
He is now embroiled in a race with Jeff Bezos to be the first “space billionaire” to enter orbit after the Amazon founder says he and his brother will join the maiden flight of his New rocket. Shepard next month.
Virgin Orbit is advised by Credit Suisse and Liontree Advisors, while Goldman acts for NextGen on merger talks.
A Virgin Orbit spokesperson declined to comment on Saturday, while NextGen could not be reached for comment.