Before Virgin Galactic starts bringing human beings closer to the cosmos, Richard Branson's space tourism company has set its sights on another new frontier: the New York Stock Exchange.
The British billionaire announced Tuesday that Virgin Galactic planned to become the first human spaceflight company to go public via a merger with a New York investment firm. Social Capital Hedosophia will take a 49% stake in the company, which will be valued at roughly $1.5 billion. The firm's chief executive, Chamath Palihapitiya, will invest an additional $100 million in the combined enterprise at $10 per share and become its chairman. The listing is expected before the end of the year.
The move is a major shift for a company that has been funded largely by Branson's personal fortune as it struggled to get its commercial operations underway, and start generating real revenue. When he founded the company in 2004, Branson pledged that flights would happen within a few years, but the endeavour has taken much longer, and been far costlier than originally anticipated.
With the capital it raises by going public, Virgin Galactic said it will be able to sustain its operations until it begins commercial flights and starts generating its own revenue. Six hundred people in 60 countries have put down more than $80 million in deposits to get on Virgin Galactic's reservation list, ultimately signing up to pay as much as $250,000 a ticket; the company's customer backlog alone would double the number of people who have ever gone to space.
"Great progress in our test flight program means that we are on track for our beautiful spaceship to begin commercial service," Branson said in a statement. "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."
The public listing would represent a major milestone for the fast-growing space sector, which could be worth $2.7 trillion by 2045, according to Bank of American Merrill Lynch. For years, Branson's Virgin Galactic has been locked in competition with fellow billionaire enterprises, such as Elon Musk's SpaceX and Jeff Bezos' Blue Origin. Bezos has said Blue Origin is vying to build a lunar lander for NASA, as it aims to return astronauts to the moon by 2024. (Bezos also owns The Washington Post.)
Virgin Galactic was founded in 2004, but it suffered serious setbacks after a spaceship came apart during a test flight of the Mojave Desert in 2014, killing a co-pilot, Michael Alsbury. So far, Virgin has flown its vehicle SpaceShipTwo to the edge of space twice. The first flight, in December, was with two test pilots. The second, in February, had two pilots and a crew member. The five members of the flights were awarded commercial astronaut wings by the Federal Aviation Administration.
"We are confident that VG is light-years ahead of the competition," Palihapitiya said in a statement. "It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction."
The company has raised more than $1 billion since its inception, but much of that funding came directly from Branson. In 2017, Saudi Arabia's Public Investment fund said it planned to pour $1 billion into the company, but Branson halted talks after the murder of Saudi journalist and Washington Post contributing columnist Jamal Khashoggi last year.
In May, the company announced that it would finally move its operations to Spaceport America, the launch site in rural New Mexico, after years of waiting and delays. The "world's first purpose-built commercial spaceport" - which cost New Mexico taxpayers $220 million to build - will house Virgin Galactic's fleet of space vehicles and 100 staff by the end of the summer.
Unlike a traditional rocket that launches vertically, Virgin Galactic has built a spaceplane that is tethered to the bellow of a carrier aeroplane, which hoists it to an altitude of about 40,000 feet. There, the spaceplane is released, fires its motor and races through the atmosphere to the edge of space, where passengers would spend about four minutes in a weightless environment.
Currently, the company is building two more spacecraft. In an interview George Whitesides, Virgin Galactic's chief executive, said the merger would allow the company to build as many as five spaceplanes and two carrier aircraft, as well as help invest in additional spaceports around the world.
A larger fleet would "allow us to over time reduce the cost and open up the market even further," he said.
Virgin has been in discussions to open spaceports in Europe, the Middle East and Asia, he said. Ultimately it wants to build a network of destinations that would allow passengers to rapidly cross the globe in one of its spacecraft.
Branson has said he intends to fly this year. But Whitesides said, "we have a few more test flights." He added he was aware that "obviously Richard is eager to fly."
- Washington Post