An astronomical value for Virgin’s space mission
Sir Richard Branson has sold a third of his spaceship venture at a price valuing the project at $900m. What planet are the buyers on? Abu Dhabi, it seems.
Many people assumed Branson was on a flight of fancy rather than a flight into space but he has convinced Sheikh Mansour bin Zayed al-Nahyan to stump up $280m for 32 per cent of Virgin Galactic and to invest a further $100m on launches.
That values the venture – dare we call it a business? – at half as much as Easyjet. But unlike commercial airlines, including Virgin Atlantic, Virgin Galactic has no timetable, no revenue, no licence and has not even taken off yet.
As the owner of Manchester City football club, the sheikh may be used to investing on instinct in high-profile projects rather than studying cashflows, however, this purchase is not from his own pocket but through the state investment company he chairs.
That said, this Abu Dhabi company invested in Barclays last autumn when that looked a far riskier venture than going into space and it has emerged with a healthy profit. It has also bought 9 per cent of Mercedes Benz, though it is hard to see synergy between the cars and the spaceships Branson hopes to launch.
If Virgin Galactic looked originally like a publicity vehicle to boost Branson’s conventional airlines (like his escapades in balloons), Abu Dhabi may be seeking a similar stimulus to the Gulf economy from being associated with a high-tech global project. It gains regional rights to the space venture that could highlight its scientific credentials and remind people the emirates are not simply a homeland to oil-rich playboys.
However, rich playboys are just what Branson needs. Testing of Virgin Galactic will allegedly start this year with flights two or three years away. Some 300 people are said to have paid $40m in deposits to be on board – about £80,000 each – but not everyone will pay the premium to be first and Branson needs a long queue of passengers.
To justify the value put on the project by this deal, Virgin Galactic needs annual revenues of almost $1bn. Making money out of space may mean recruiting a different sort of rocket scientist.
