Richard Branson’s Virgin Galactic will go public

by Ike Obudulu Posted on July 9th, 2019

Billionaire Richard Branson’s space-tourism venture Virgin Galactic is getting ready to go public by the end of the year, giving it the much-needed funds to take on Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX in the race to space.

The company has agreed to merge with Social Capital Hedosophia Holdings Corp., which will take a 49 percent stake in the combined company.

Social Capital Hedosophia is listed on the New York Stock Exchange, and the deal would introduce Virgin Galactic as the first and only publicly traded commercial human spaceflight company.

The pro forma enterprise value of the merger is $1.5 billion. Social Capital Hedosophia Founder and CEO, Chamath Palihapitiya, will invest an additional $100 million.

The transaction is expected close in the second half of 2019. Following the merger, the current Virgin Galactic shareholders and Social Capital shareholders would own up to approximately 51 percent and 49 percent of the combined company, respectively.

In a statement, Virgin Galactic noted that its pre-commercial service order book has customer reservations from more than 600 people in 60 countries. This represents about $80 million in total collected deposits and $120 million of potential revenue.

Virgin Galactic’s spaceship VSS Unity is the first and the only vehicle built for regular commercial service into space.

Following the deal, George Whitesides will remain as CEO, while Palihapitiya will become Chairman.

Branson is one of several billionaires, including Amazon.com founder Jeff Bezos and Tesla’s Elon Musk, who are racing to send customers into space.

Branson founded Virgin Galactic in 2004 to cash in on burgeoning demand for satellite launch services and, eventually, space travel, a market long dominated by industry stalwarts such as United Launch Alliance – a partnership between Boeing Co and Lockheed Martin Corp.

But since its early days, his ambitious timeline for taking customers into space has suffered delays and setbacks.

In February, the company took a step closer to its goal of suborbital flights for space tourists when its rocket plane soared to the edge of space with a test passenger for the first time.

Rival Blue Origin has launched its New Shepard rocket to space, but its trips have not yet carried humans. SpaceX last year named Japanese billionaire Yusaku Maezawa as its first passenger on a voyage around the moon, tentatively scheduled for 2023.

Hundreds of people from 60 countries, including actor Leonardo DiCaprio and pop star Justin Bieber, have paid or put down deposits to fly on one of Virgin’s suborbital flights. Some of Virgin Galactic’s ticket holders have been waiting over 14 years for their trip.

A 90-minute flight, which allows passengers to experience a few minutes of weightlessness, costs about $250,000.

The cost is expected to come down “dramatically” over the next decade as space travel becomes more accessible to common people, Branson told reporters on Tuesday.

“I think we can do it a lot quicker than aviation did it.”

Virgin’s current reservations represent about $80 million in total collected deposits and $120 million of potential revenue.

Social Capital Hedosophia’s chief executive officer, Chamath Palihapitiya, will invest $100 million as part of the deal and will become chairman of the combined company.

“By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts,” Branson said in a statement.

The deal as earlier reported said the SPAC will invest about $800 million in Virgin Galactic for a 49% stake.

Credit Suisse advised Social Capital Hedosophia, while M Klein and Co, LionTree Advisors and Perella Weinberg Partners advised Virgin.

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