Richard Branson’s Virgin Orbit is looking to raise up to $200 million in a funding round that could value the satellite-launch business at around $1 billion, according to people familiar with the matter.
The fundraising comes as the British billionaire’s sprawling travel-to-finance empire and the wider commercial space industry have been hit hard by the coronavirus pandemic.
Virgin Orbit said in August it had hired LionTree Advisors LLC and Perella Weinberg Partners LP to look at potential financial transactions. Those banks are now charged with helping it raise between $150 million to $200 million by as early as the end of the year for capital expenditure and to fund satellite launches, according to the people familiar with the plans.
Mr. Branson is among a group of entrepreneurs, including Elon Musk and Amazon.com Inc. founder Jeff Bezos, who have helped kick-start an era of commercially led space exploration.
While the satellite industry has historically been dominated by large vehicles launching large satellites, Virgin Orbit and several other rivals world-wide want to send smaller satellites into lower orbits, targeting civil, military and commercial customers at the lower end of the market.
Analysts say Virgin Orbit’s proposed launches are cheaper and more flexible but have confronted technical issues and still face hurdles. The company, which has yet to put a payload into orbit, initially expected to be launching roughly a dozen times by now.
“In a crowded market, Virgin Orbit is a front-runner,” said Carissa Christensen, founder and chief executive of Bryce Space and Technology, a consulting firm. “But like everyone else, it is facing some challenges.”
Virgin Orbit’s business is partly dependent on a bevy of smaller space startups—producing everything from miniature satellites to compact but powerful Earth-observation sensors—to provide new commercial opportunities and a steady flow of scientific payloads from governments and universities.
But even before the pandemic, many space startups struggled to maintain momentum and find funding. Since Covid-19 struck, projected demand for launches has slumped and some investment has dried up.
More recently, industry officials and consultants have pointed to a gradual resurgence of interest in the sector, prompted by the U.S. military’s support for smaller, less-expensive satellites and more-nimble launch systems.
Virgin Orbit has also had its own problems. In May, the company’s initial demonstration flight failed after a rocket released from a specially outfitted jumbo jet failed to reach low-Earth orbit.
Virgin Orbit officials said at the time that on average one out of two launches of a new rocket design fail.
For Mr. Branson, Virgin Orbit is the third time he has turned to investors amid the pandemic, which has crushed the tourism and travel markets that form the mainstay of his Virgin Group.
In July, Virgin Atlantic Airways secured a financial package worth about $1.5 billion that will allow it to stave off bankruptcy. That included a sale of around 10% in Virgin Galactic Holdings Inc., SPCE -3.12% which left him as a minority owner in the space tourism firm.
Earlier this month, Virgin Group floated a special-purpose acquisition company in New York, raising a more-than-expected $480 million to make investments in the consumer industry.
Over the last decade, Mr. Branson has mainly taken a back seat on management of his companies but remains focused on his two U.S.-based space ventures, Virgin Galactic and Virgin Orbit, according to people familiar with him.
Virgin Orbit started building rockets in Long Beach, Calif., a few years ago and has about 500 employees.
Write to Alistair MacDonald at [email protected], Ben Dummett at [email protected] and Andy Pasztor at [email protected]
Richard Branson’s Virgin Orbit Seeks $1 Billion Valuation in Fundraising Wire Services/ WSJ.