Branson . . . we have a problem!
Virgin tycoon faces ANOTHER delay in billionaire space race as £650m hitch hits launch
SIR RICHARD Branson is battling a further delay to his Virgin Galactic mission, losing out in the billionaire space race to rivals Elon Musk and Jeff Bezos.
Branson said in July that Virgin Galactic, launched in 2004, would become the first publicly traded commercial spaceflight operator through a merger with a New Yorklisted investment firm.
But his plan to raise about $800 million (£650 million) of investment for the space tourism project faces a potentially embarrassing delay until the end of the year, The Mail on Sunday can reveal.
Documents released by Branson’s investment partner, run by Sri Lankan-born Chamath Palihapitiya, suggest the tycoon’s dream of winning the billionaire space race may be jeopardised by delays in raising the vast amount of capital required.
Palihapitiya has admitted that directors of his Social Capital Hedosophia (SCH) firm believe there ‘may not be sufficient time’ to meet a key deadline next week to complete the merger with Virgin Galactic. In an effort to keep plans on track, SCH is holding an emergency general meeting at its California headquarters tomorrow when shareholders will vote on whether to extend the merger deadline until December.
Palihapitiya described the extension as ‘essential’ to the deal’s success and urged investors to back the merger. He said: ‘If the extension is not approved, we may not be able to consummate the VG [Virgin Galactic] business combination.’
If the merger is successful, Virgin Galactic will gain a listing on the New York stock exchange and investment to finance the space tourism enterprise until it starts making a profit.
The firm will charge passengers – typically with fortunes of $10million or more – about $250,000 to take a 90-minute flight into space to see the curvature of the Earth and experience weightlessness.
More than 600 fabulously wealthy people including actors Brad Pitt and Angelina Jolie have put down combined deposits of $80million.
Virgin Galactic’s passenger space plane, VSS Unity, reached space for the first time last December, and the firm unveiled its Spaceport America space hub in New Mexico last month.
Branson – who founded the Virgin Group business empire spanning 400 companies from the Virgin Atlantic airline to Virgin Trains – initially hoped to launch commercial spaceflights in 2007, but has
pushed back lift-off to 2020. He faces intense competition from Bezos, the billionaire behind Amazon, who founded space venture Blue Origin in 2000. The company unveiled its Blue Moon lunar lander in May and hopes to take passengers to the moon by 2024.
Meanwhile Musk, the billionaire founder of Tesla and PayPal, has fired a Tesla Roadster into space and wants to colonise Mars. His SpaceX firm this year launched its Starlink constellation of 60 satellites in a bid to eventually provide universal broadband coverage around the world.
Branson has raised more than $1billion since founding Virgin Galactic 15 years ago. The sum includes $380million from Abu Dhabi firm Aabar Investments, now under Mubadala. Branson scrapped talks over a $1billion investment from Saudi Arabia last year after the murder of journalist Jamal Khashoggi.
Branson and Palihapitiya, a former Facebook executive, announced the plan to make Virgin Galactic a public company in July, saying the ‘additional capital’ provided by the merger with SCH will give Virgin Galactic ‘the support needed to reach commercialisation’. Palihapitiya, a keen poker player, will put in an additional $100million when the deal completes and will become chairman of the combined business.
SCH is a so-called ‘blank cheque’ company that raised $690 million through its stock market float in September 2017 with the aim of buying a tech ‘unicorn’ – a private company valued at $1 billion or more.
The firm has to make an acquisition within two years, meaning the deadline for its Virgin Galactic deal is September 18 unless the board can secure an extension. If shareholders do not approve the change of date to December 18 then SCH must return the $690million raised through the flotation to investors and the trust account for the funds will be liquidated.
If the SCH board secures an extension, the merger will still have to be approved by SCH’s shareholders, who include directors of the firm and three New York hedge funds.
Virgin Galactic called the delay to the merger ‘mainly a procedural necessity’, and said the deal is expected to close ‘in the second half of 2019’. The spokesman said: ‘Virgin Galactic is not a listed company yet. Upon closing of the transaction, Virgin Galactic will be introduced as the first and only publicly traded human spaceflight company.’
Branson said in the summer: ‘We are at the dawn of a new space age with huge potential to sustain and improve life on Earth.’
We are at the dawn of a new space age and can improve life on Earth