Billionaire Richard Branson’s Virgin Orbit has reportedly hired bankers to go public via SPAC merger

Virgin Orbit Boeing 747

Billionaire Richard Branson has reportedly hired bankers to take his aerospace company Virgin Orbit public through a special purpose acquisition company merger, aiming for a $3 billion valuation, The Wall Street Journal reported Friday.

This move is consistent with the billionaire’s strategy of taking his companies public via blank-check listings amid the explosion of SPACs in recent years. SPACs are essentially shell companies seeking to merge with private companies with the intention of taking them public.

The entrepreneur in 2019 took his space-tourism company Virgin Galactic Holdings public via SPAC and enlisted billionaire investor Chamath Palihapitiya as the chairman. Palihapitiya in early March, however, cashed out his entire personal stake for $211 million.

More recently, VG Acquisition, a SPAC sponsored by Branson’s Virgin Group, announced in February that it has merged with DNA testing startup 23andMe in a deal that would put the company famous for its at-home kits at an enterprise value of $3.5 billion.

Virgin Orbit has hired Credit Suisse Group and LionTree, according to The Wall Street Journal, and is currently looking for a SPAC merger partner.

Branson’s company owns 80% of South Carolina-based Virgin Orbit. Mubadala Investment and the United Arab Emirates sovereign-wealth fund own the remaining stake.

The valuation is not guaranteed but the billionaire is banking on Virgin Orbit’s January test launch, which successfully sent its first rocket to successfully reach Earth orbit, eight months after its previous attempt failed.

SPACs have been around for more than a decade but have since recently boomed. Just three months into 2021, data from SPAC Analytics already show 246 SPACs that raised $76.7 billion versus the 248 in 2020 that raised $83.3 billion.

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Goldman Sachs creates SPAC team in Hong Kong amid surging Asian interest in blank-check companies

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Goldman Sachs has created a SPAC team in Hong Kong dedicated to handling the surge in blank-check deals that have emerged in the Asian region.

The strategic team was set up last year but was not made public, according to Reuters. SPACs – short for special purpose acquisition company – gained traction in Asia moving in step with the frenzy in the United States although with less volume.

Raghav Maliah, the global vice-chairman of Goldman Sachs’ investment banking division, leads the team alongside Vikram Chavali and Edward Byun, Reuters reported.

SPACs, which are shell companies seeking to merge with private companies with the intention of taking them public, have since taken off given. Proponents cite their simplicity and lower cost.

Regulators however have publicly expressed caution over the recent SPAC mania. On Thursday, acting SEC Chair Allison Herren Lee said that SPAC returns don’t warrant the “hype” they’re getting. The agency also released an investor alert that specifically warned of the risks involved with celebrity-backed SPACs.

SPACs have been around for more than a decade but have since recently boomed. In 2019, a total of 59 SPACs raised $13.6 billion in the US, according to SPAC Analytics. The figure quadrupled to 248 in 2020 and raised $83.3 billion. But in the third month of 2021 alone, data already show 246 SPACs that raised $76.7 billion, comprising 75% of initial public offerings.

Meanwhile, in Asia, there has been $2.64 billion worth of SPAC deals in 2021 – already exceeding the $2.46 billion for the entire 2020, according to Dealogic data cited by Reuters.

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