Virgin Galactic, Richard Branson’s space tourism business, would be to go public by merging with all the special purpose acquisitions firm (SPAC) Social Capital Hedosophia.
Virgin Galactic will increase around $800 million in the list, as reported by a spokesman for the company. The business is ideal for this SPAC process, and will benefit from a cash injection while avoiding a possibly time-consuming and harmful IPO process.
The space business will unite with Social Capital Hedosophia, which can be listed in New York. The investment company will have a 49 percent stake in the combined enterprise. Shares in Social Capital Hedosophia were up 2.6 percent in pre-market trading as news of the deal broke.
Virgin Galactic is reportedly close to taking its first passengers to distance, and will use the money injection to choose the company through to that point where it could make a profit from rides to the stratosphere. “This transaction represents another step of the exciting journey. We think it provides us the financial flexibility to build a booming commercial service and invest appropriately to the future,” said George Whiteside, CEO of Virgin Galactic.
By going public through a SPAC, and avoiding the IPO entirely, Virgin Galactic can sidestep a costly investor roadshow, and avoid the struggle of selling shares in a company with several risks. The space business is fairly insecure, and the company has suffered one tragedy after a ship awakened during a test flight and murdered one pilot. That kind of danger can spook investors onto a road show.
Social Capital priced 60 million shares at $10 at September 2017, also beneath average SPAC rules had two decades to commit the cash raised. With two or three months remaining, Palihapitiya poured the money to Virgin Galactic.
Branson has searched for investment to the company for a while allegedly, and suspended talks over a $1 billion pot of money from Saudi Arabia after the murder of journalist Jamal Khashoggi.
Virgin Galactic currently has a documented 700 customers ready to pay $250,000 each to take the 90-minute trip to the edge of the planet’s atmosphere. The distance tourists will experience weightlessness and see the curvature of the planet. Branson expects to select the flight himself this season, and clients to follow soon after. The organization’s spacecraft has flown a test mission to space already.