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Ready for lift-off? Sir Richard Branson faces crucial vote of confidence in Virgin Galactic
Sir Richard Branson’s bid to float his space tourism company Virgin Galactic faces its first test of public market confidence this week when investors decide whether to back the British billionaire’s venture or withdraw cash from the company it plans to merge with.
Virgin Galactic recently unveiled plans to merge with Social Capital Hedosophia (SCH), a New York-listed investment vehicle run by the Silicon Valley billionaire Chamath Palihapitiya, in an unconventional effort to become the first publicly-listed space tourism company.
SCH, which was set up two years ago to find a company to merge with, is due to be liquidated with $712m (£578m) returned to shareholders next week (September 18) unless investors extend the deadline to December, by which time Mr Paliphapitya and Sir Richard expect to complete the deal.
In order to secure time for the deal, SCH has offered investors the chance to withdraw their cash instead of becoming investors in Virgin Galactic. Tomorrow’s (Monday) vote in Silicon Valley will be seen as an early barometer of investor appetite for Sir Richard’s venture, which is expected to be worth $1.5bn when the merger is complete.
According to a presentation shared with analysts last week, Virgin Galactic expects to begin flights in June next year, and to be flying more than 1,500 passengers a year on suborbital flights by 2023. It expects to break even in 2021.
The company is in negotiations with Italy and the United Arab Emirates to build spaceports in addition to its current base in New Mexico.
It also plans to go beyond space tourism by using its aircraft for supersonic flights between cities, saying it could fly passengers between London and New York in an hour, or Los Angeles and Sydney, currently a 15-hour flight, in 2.5 hours.
Virgin Galactic has raised around $1bn to date since it was founded, largely from Sir Richard’s Virgin Group and Abu Dhabi’s Mubadala wealth fund. It cancelled a proposed billion-dollar investment from Saudi Arabia last year after the murder of the Saudi dissident Jamal Khashoggi.
Sir Richard’s company has faced multiple delays to its promise to send tourists on 90-minute flights into space, and has a waitlist of 600 people who have paid $200,000 for a ticket. Last year it successfully sent test pilots into space.