Space SPAC: Virgin Orbit to go public via $3.2bn merger

23 Aug 2021

Image: Virgin Orbit

The satellite launch company had its first successful commercial flight in June.

Virgin Orbit, Richard Branson’s commercial space launch firm, has made a “definitive merger agreement” with NextGen Acquisition Corp II, a special-purpose acquisition company (SPAC) listed on the Nasdaq.

The merger values Virgin Orbit at $3.2bn, it said, and will allow the company to go public without a traditional IPO. CNBC had reported on “advanced discussions” relating to the deal as early as June.

The deal is expected to raise up to $483m for Virgin Orbit, including a $100m private-investment-in-public-equity (PIPE) transaction bringing in aviation titan Boeing and private investment firm AE Industrial Partners as shareholders. Additionally, the company said it will gain access to up to $383m of cash held in the trust account of NextGen.

It plans to use the almost half a billion dollars in capital to invest in scaling rocket manufacturing, fund growth in its space solutions business, and put towards its “ongoing product development initiatives”.

The combined company will be named Virgin Orbit and is expected to be listed as ‘VORB’. The transaction is predicted to be closed in the fourth quarter of 2021.

Virgin Orbit was spun out from Virgin Galactic, the suborbital passenger spaceflight company also founded by Branson, in 2017. The company delivers small (300kg to 500kg) satellites to various orbits using its LauncherOne rocket, which launches from under a customised Boeing 747 at an altitude of 10.7km.

The airborne launch means the rocket begins its independent flight at Mach 0.9 and above two-thirds of the atmosphere, according to Virgin Orbit. The company notes that the carrier plane can take off from a wide variety of locations around the world, and describes it as “the world’s most reusable launch stage”.

The company marked its first commercial launch in June after some failed starts last year.

NextGen Acquisition Corp II was set up by former Goldman Sachs partner George Mattson and former PerkinElmer CEO Gregory Summe. The pair completed a separate SPAC merger deal with Xos Trucks just last week.

Speaking about the newly announced deal, Branson said: “The Virgin Orbit team has proven its ability to create new ideas, new approaches and new capabilities. They are building on the incredible foundation of their rapid transition into successful commercial launch operations to find new ways to solve big problems that uplift our customers’ amazing ideas, again and again.

“I’m very excited we are taking Virgin Orbit public, with the support of our partners at NextGen and our other wonderful investors. It’s another milestone for empowering all of those working today to build space technology that will positively change the world.”

The company is currently owned by Virgin Group, Mubadala Investment Company, and some of its management and employees. Existing shareholders are expected to retain about 85pc of the new company, with 10pc going to shareholders of NextGen, 3pc going to the PIPE investors and the final 2pc to the SPAC sponsor.

Dan Hart, Virgin Orbit’s CEO, added: “Our success in launch has driven the business forward, and now we expect this investment will enable us to build on our R&D efforts and our incredible team. We are driving innovation with world-class design and advanced manufacturing capabilities, our unrivalled mobility of launch and our exciting space solutions services.”

Jack Kennedy is a freelance journalist based in Dublin