Richard Branson has elected to take his space company Virgin Orbit public in a $3.2 billion SPAC deal.
The Aug. 23 agreement calls for special purpose acquisition company NextGen Acquisition Corp. II (NGCA) to pay $383 million from its trust account and $100 million from a private-investment-in-public-equity issuance for Virgin Orbit parent Vieco USA Inc.
Investors in the PIPE include Boeing Co. (BA) and AE Industrial Partners LP. Previous investors in Virgin Orbit including sovereign wealth fund Mubadala Investment Co. have agreed to roll 100% of their equity into the deal.
Mubadala is increasingly involved in SPAC-related transactions, as it has participated in 11 SPAC PIPEs this year. It also has sponsored a SPAC, Blue Whale Acquisition Corp. (BWCAU), which raised $200 million in an IPO on Aug. 4.
The Virgin Orbit deal is expected to close by the end of 2021, with Virgin listing its shares on Nasdaq under the ticker VORB. On completion, current Virgin investors will hold 85% of the newly public company. SPAC investors will own 10%, PIPE investors will control 3%, and the SPAC sponsor will retain 2%.
The deal value is based on 2.1 times 2025 estimated Virgin Orbit revenue.
Founded in 2017, Long Beach, Calif.-based Virgin Orbit operates an air-launched, liquid-fueled system using a custom Boeing 747 and reusable rocket to launch satellites. Virgin Orbit has launched vehicles for the U.S. Department of Defense and NASA, and the U.K. has selected Virgin to establish service there. The U.K. Space Agency was a Virgin investor.
Since Virgin Galactic and Social Capital Hedosophia Holdings Corp. closed their $1.3 billion deal in October 2019 to form Virgin Galactic Holdings Inc. (SPCE), the space race has been on for SPACs. Including Virgin Orbit, there have been at least a dozen business combinations bringing together SPACs and space-related companies.
Branson and Virgin Group have certainly fallen in love with SPACs as a vehicle. Beside the two Virgin companies that have joined with SPACs, Virgin has sponsored a trio of SPACs, which have raised an aggregate of $911 million, though the third SPAC, Virgin Group Acquisition Corp. III, has not yet gone public and hopes to raise $300 million. Virgin Group’s first vehicle acquired 23andMe Holding Co. (ME) in a $3.3 billion deal on June 16.
NextGen II went public on March 23, raising $382.5 million, with Credit Suisse Securities LLC and Goldman, Sachs & Co. as underwriters. A previous SPAC, NextGen Acquisition Corp., acquire Xos Inc. (XOS) in a $1.2 billion deal that closed Aug. 20.
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