Boeing to Back Virgin Orbit SPAC Launching Late This Year

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Aug. 24 2021, Published 11:05 a.m. ET

Sir Richard Branson's responsive satellite launch and space solutions company Virgin Orbit is maintaining its trajectory to go public via a SPAC vehicle. Now, Boeing (NYSE:BA) has committed to provide PIPE (private investment in public equity) funding for the deal.

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Given the business combination and PIPE capital, Virgin Orbit is looking at a load of funds to work with. Branson's latest brand plans to use that capital to help grow the startup, which he hopes will succeed alongside sister company Virgin Galactic (NYSE:SPCE).

How Boeing is contributing to the Virgin Orbit SPAC

Boeing is one of a few PIPE investors for Virgin Orbit. PIPE investors inject money before the merger between a SPAC and private company finalizes. Investors acquire common or preferred stock at a price that's below proposed market value, which means that the companies achieve discounted equity upon the presumption the company will grow.

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Boeing already has its own $129.55 billion market cap. However, the PIPE investment could help the aircraft manufacturer seep into the space industry—a corner it has been hoping to infiltrate for years.

Boeing joins others in a fully-committed $100 million PIPE

Virgin Orbit has managed to secure $100 million in fully committed PIPE equity. This isn't a surprise given Branson's experience with taking companies public (and, according to SPCE, launching them into meme stock popularity).

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Boeing, AE Industrial Partners, and other existing Virgin Orbit investors (like Mubadala Investment Company and United Arab Emirates sovereign-wealth fund) will contribute to the $100 million pool. Also, NextGen Acquisition Corp. II (NASDAQ:NGCA) will play a role in the funding.

Ultimately, Virgin Orbit is looking at $483 million from the PIPE investments and business combination collectively.

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According to the company's website, "Virgin Orbit has rapidly moved into successful commercial operations with three launches in just thirteen months and a 100% success rate on revenue-generating missions." This nearly half a billion dollars in pre-merger funding would spearhead this.

Virgin Orbit set to merge with public partner later this year

Virgin Orbit is eyeing a merger with NextGen in the fourth quarter of 2021. After the SPAC and private company merge, the "NGCA" ticker will transition to the Virgin Orbit ticker "VORB."

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Retail investors should understand that VORB will be a low-float stock regardless of how trading commences. According to the website, "Existing Virgin Orbit shareholders are expected to retain ownership of approximately 85 percent of the combined company." This could potentially increase volatility, especially with a brand-new stock.

What will happen to Boeing's Starliner?

Virgin Orbit's "satellites as a service" model changes the game for outer-atmospheric companies. Meanwhile, Boeing's own Starliner spacecraft has yet to launch. Boeing delayed a previously planned launch due to faulty valves. Starliner is a collection of reusable crew capsules that Boeing hopes will transport NASA crew members to the International Space Station.

Boeing seems to be using Virgin Orbit to its advantage considering its own space exploration efforts have fallen flat thus far. Perhaps that means the aircraft manufacturer will keep its goals earth-bound while outsourcing investments to gain capital amid the space and satellite race.

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