LONDON – Richard Branson’s Virgin Galactic Holdings Inc. became the first space-tourism business to go public as it began trading Monday on the New York Stock Exchange.
The listing, carried out through a merger with a shell investment company that was already trading, secures vital new funding for Branson as the British entrepreneur competes with fellow billionaires Jeff Bezos and Elon Musk in what’s been dubbed “the new space race.” The deal gives Virgin Galactic a market value of about $2.4 billion, the company said.
Investors are being asked to back a project that’s been running for 15 years without yet achieving a first commercial launch, and which came close to folding following a fatal crash during a 2014 test flight.
Virgin Galactic combined last week with the investment firm Social Capital Hedosophia rather than conduct an initial public offering. That avoided a costly investor roadshow and the challenge of selling shares in such a company likely to be perceived as high risk by many.
The new entity climbed 5.1 percent to $12.40 at 12:34 p.m. in New York on Monday, its first day trading under the ticker SPCE. The shares rose 11 percent Friday after the combination was completed, handing Virgin Galactic more than $450 million in primary proceeds. The free float comprises about 40 percent of total stock, with the rest owned by Branson and backers from Abu Dhabi.
Virgin Galactic is one of a trio of billionaire-backed space start-ups, each tapping different technologies. Branson is using an aircraft to carry a spaceship to high altitudes, where it blasts away. Blue Origin, controlled by Amazon.com Inc. founder Bezos, relies on more-conventional rockets. Musk’s Space Exploration Technologies Corp. deploys reusable launchers.
While transporting satellites has been a focus for SpaceX, Branson is chasing the tourism market, planning a first commercial flight next year. Blue Origin plans to take payloads and tourists to the edge of space on an 11-minute flight, while Musk has pledged to send passengers to the moon, Mars and beyond.
Branson said last week that Virgin Galactic also is interested in developing hypersonic airline flights after Boeing Co.’s future-technologies arm pledged $20 million for a minority stake. That could mean linking U.S. cities in a matter of minutes and, ultimately, the U.S. and U.K. with Australia in just a few hours.
Social Capital Hedosophia’s founder, Sri Lanka-born Chamath Palihapitiya, will contribute $100 million to the venture and become its chairman. Virgin Galactic has raised more than $1 billion since it was founded in 2004, initially from Branson, with an Abu Dhabi investment company taking a stake in 2010.