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Virgin Orbit to be publicly traded on Nasdaq following merger; expected windfall to boost operations

Virgin Orbit’s Cosmic Girl flies through the air after deploying the LauncherOne rocket with nine satellites, Wednesday, June 30, 2021. Photo courtesy of Virgin Orbit.

Small satellite launch company Virgin Orbit is preparing to go public, announcing Monday it will merge with a special purpose acquisition company, or SPAC, to list on the Nasdaq stock exchange by the end of the year.

The Long Beach-based aerospace company is combining with NextGen Acquisition Corp. II, which values Virgin Orbit at $3.2 billion. NextGen is currently traded as NGCA on the Nasdaq but once the merger is completed later this year shares will convert to VORB.

“The Virgin Orbit team has proven its ability to create new ideas, new approaches and new capabilities,” founder Richard Branson said in a statement. “I’m very excited we are taking Virgin Orbit public. It’s another milestone for empowering all of those working today to build space technology that will positively change the world.”

The deal is expected to raise $483 million for Virgin Orbit, including $383 million of cash in a NextGen trust account and $100 million through a private investment in public equity, or PIPE, led by Boeing, AE Industrial Partners and others. The funds are meant to further scale Virgin Orbit’s operations to meet increasing demand, according to the announcement.

Over the next two years, 35% of proceeds are expected to be used to accelerate research and development, 15% to accelerate manufacturing capabilities and 25% each for space solutions development and increased mobility with additional launch vehicles. A company spokesman told the Business Journal that much of the investment is likely to stay within its Long Beach facilities but that there have been talks of expansion outside the area.

“An incredible talent pool, supportive local government, a strong list of aerospace suppliers—Long Beach has everything a growing aerospace company like Virgin Orbit requires,” spokesman Kendall Russell said in an email. “It’s proven to be a fantastic home base for our operations and we expect Long Beach to be our corporate home for some time.”

Virgin Orbit’s existing shareholders include Branson’s Virgin Group, Mubadala Investment Company as well as management and employees, all of which will roll 100% of their equity into the combined company, according to the announcement. Existing Virgin Orbit shareholders are expected retain ownership of 85% of the company.

Virgin Orbit has about $300 million in active contracts, $1.3 billion in active proposals and $2.3 billion in identified opportunities ranging from national security through the U.S. Air and Space forces, civil enterprises such as NASA and commercial missions through private companies, according to a company presentation.

“We’ve built Virgin Orbit in order to change the business of satellite launch and to open space for everyone, globally,” CEO Dan Hart said in a statement. “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 unrivaled mobility of launch, and our exciting space solutions services.”

The company anticipates being profitable by 2024, with estimated earnings before interest, taxes, depreciation and amortization, or EBITDA, projected to be $229 million that year. For 2021, the company expects to have $15 million in revenue with an EBITDA loss of $156 million.

Revenue, however, is forecasted to grow an average 166% every year through 2026, from $15 million this year to over $2 billion, according to Virgin Orbit. National security and defense contracts are expected to make up the lion’s share of revenue growing to $838 million by 2026.

“We are delighted that our search for a great company, with strong organic growth in a large and growing market, disruptive technology and a world-class management team has led to our partnership with Virgin Orbit,” NextGen co-founders George Mattson and Greg Summe said in a joint statement. “The space economy is developing rapidly and Virgin Orbit is well positioned to benefit through its ability to competitively launch at any time, from any place on Earth, to any orbit and inclination.”

In 2015, Virgin Galactic took up residence in the newly constructed Douglas Park industrial complex adjacent to Long Beach Airport. Two years later, the site was announced as the headquarters of Branson’s latest venture, Virgin Orbit. In the four years since its founding, the company has developed the world’s first air-launched satellite delivery system.

Space vehicle launches have been land-based for more than six decades, ever since the USSR successfully launched Sputnik 1 into orbit in 1957. Virgin Orbit uses a customized Boeing 747, dubbed Cosmic Girl, as a mobile launch site that deploys the company’s LauncherOne system—a fully reusable first stage vehicle—while flying 35,000 feet above sea level.

Because missions can be flown out of any existing airfield around the world, Virgin Orbit has the ability to bring launch capabilities to dozens of nations that have space agencies and satellite industries but no domestic launch sites such as the United Kingdom and Brazil.

Virgin Orbit’s first attempt to reach space failed in May 2020 after the LauncherOne engine shut down prematurely due to a breach in a high-pressure fuel line carrying cryogenic liquid oxygen. On Jan. 17, the company successfully reached space for the first time, delivering a payload of nine small satellites to orbit. Five and a half months later, Virgin Orbit successfully delivered seven more satellites to orbit.

“Virgin Orbit is a game changer for the small satellite launch and space solutions industry and its listing is expected to be yet another milestone in its continuing success story,” Abdulla Shadid, an executive director at Mubadala, said in a statement. “Our investment in Virgin Orbit since its inception is a reflection of our confidence in the company’s ability to carve out a leading role in this sector.”

Editor’s note: This story has been updated with additional comment from Virgin Orbit.

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