Virgin Galactic Will Go Public Via $800 Million Deal With Chamath Palihapitiya’s Investment Company

Virgin Galactic, the commercial spaceflight company founded by billionaire Richard Branson, said Tuesday it had agreed to a deal with venture capitalist Chamath Palihapitiya’s investment company that would make it the first publicly traded space tourism company.

Under the terms of the deal, Social Capital Hedosophia will invest $800 million for a 49% stake in the merged company, split between SCH’s public stock holders and its founder Palihapitiya. Stakeholders in Virgin Galactic, which includes the Virgin Group as well as Mubadala Investment Ltd, an investment vehicle for the government of Abu Dhabi, will retain a 51% share of the company.

The management team of Virgin Galactic will remain the same. George T. Whitesides will stay on as CEO. Former Twitter COO Adam Bain, a stakeholder in SCH, will join the board along with Palihapitiya. Virgin Orbit, a spin-off company founded in 2017 to provide small satellite launches, will remain part of Virgin Group and is not impacted by the merger.

This transaction represents a victory for Palihapitiya, an early Facebook executive who left the company to found venture firm Social Capital in 2011. He founded Social Capital Hedosophia as a special-purpose acquisition company that was first listed in September 2017 with an opening share price of $10. At the time,he believed the traditional IPO model for tech startups was broken and wanted to offer an alternative.

Palihapitiya had predicted the SPAC’s market cap would be “between $3 billion and $20 billion.” Reality hasn’t quite borne that out: Over a year later, this is the company’s first investment, and it was closed on Tuesday at $10.69, giving it a market capitalization of about $922 million. Prior to this deal, Virgin Galactic had raised about $1 billion on an estimated $1.72 billion valuation, according to Pitchbook.

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Virgin Galactic deal sparks interest in an obscure investment vehicle with a spotty track recordThere's lots of excitement that tech superstar Chamath Palihapitiya's Social Capital Hedosophia is buying a 49% stake (roughly $800 million) in Virgin Galactic to do space flights.
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