(Reuters) – British billionaire Richard Branson’s Virgin Galactic plans a stock market listing by the end of the year, becoming the first space tourism firm to tap public markets for funding.
The move will give Branson’s venture the much-needed capital in the race to space against rivals such as Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX.
The company will list its shares as part of a merger with Social Capital Hedosophia Holdings Corp, a special purpose acquisition company, which will take a 49% stake in Virgin Galactic.
Following the investment, the combined company will have a pro forma enterprise value of $1.5 billion.
Branson founded Virgin Galactic in 2004, and since its early days his ambitious timeline for taking customers into space has suffered delays and setbacks.
In February this year, the company took a step closer to its goal of suborbital flights for space tourists when its rocket plane soared to the edge of space with a test passenger for the first time.
Hundreds of people from 60 countries, including actor Leonardo DiCaprio and pop star Justin Bieber, have paid or put down deposits to fly on one of Virgin’s suborbital flights. Some of Virgin Galactic’s ticket holders have been waiting over 14 years for their trip.
A 90-minute flight, which allows passengers to experience a few minutes of weightlessness, costs about $250,000.
The cost is expected to come down “dramatically” over the next decade as space travel becomes more accessible to common people, Branson said on CNBC.
“I think we can do it a lot quicker than aviation did it.”
Virgin’s current reservations represent about $80 million in total collected deposits and $120 million of potential revenue.
Social Capital Hedosophia Chief Executive Officer Chamath Palihapitiya will invest $100 million as part of the deal and will become chairman of the combined company.
The deal was earlier reported by the Wall Street Journal, which said the SPAC will invest about $800 million in Virgin Galactic for a 49% stake.
Credit Suisse advised Social Capital Hedosophia, while M Klein and Co, LionTree Advisors and Perella Weinberg Partners advised Virgin.
Reporting by Ankit Ajmera in Bengaluru; Writing by Sweta Singh Editing by Maju Samuel