Advanced Television

Virgin Galactic merges with investment business

July 10, 2019

By Chris Forrester

Virgin Galactic, the much-delayed space tourism and would-be satellite launch supplier, is selling 49 per cent of itself to what has been described as a ‘shell company’ Social Capital Hedosophia Holdings Corp (SCH). The business has been set up by a former Facebook boss, Chamath Palihapitiya.

SCH is itself a partnership, between Social Capital and Hedosophia. The end result “unites technologists, entrepreneurs and technology-oriented investors around a shared vision of identifying and investing in innovative and agile technology companies.”  It is listed on the New York Stock Exchange and is publicly traded. The Virgin investment is its first.

Virgin will receive $1.3 billion for the stake ($1bn in shares plus $300 million in cash) and will thus gain a public listing for its business without having to mount an IPO itself. The deal is expected to wrap later this year.

Virgin Galactic had previously talked about a $1 billion injection of cash from Saudi Arabia, but reportedly Sir Richard Branson turned that down following the alleged murder of Jamal Khashoggi last year.

Virgin Galactic launched as a business back in 2004 but has suffered technical and human disaster over the years.  In 2014 it lost an experimental space-plane and its co-pilot, Michel Alsbury, in a catastrophic break-up of the aircraft over the Mojave Desert. The pilot, miraculously, survived.

Virgin’s plan is to create a space tourism business charging $250,000 per seat for a 90 minute sub-orbital flight. There are also plans to use the aircraft/space plane to launch satellites into low Earth orbit.

Richard Branson, Founder of Virgin Galactic, said: “Great progress in our test flight program means that we are on track for our beautiful spaceship to begin commercial service. 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. We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth. I am delighted that SCH has decided to become such an important part of our amazing journey. They share our dreams and together we will make them reality.”

Chamath Palihapitiya, Founder and CEO of Social Capital Hedosophia, said: “It is a privilege to partner with Sir Richard Branson, a once-in-a-generation visionary, to bring the reality of commercial spaceflight to the world. We are confident that VG is light years ahead of the competition. It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction. I cannot wait to take my first trip to space and become an astronaut.”

Categories: Articles, Business, M&A, Satellite