Satellite launch company to list on Nasdaq

New Zealand-founded satellite launch company Rocket Lab is to list on NASDAQ through a merger with a special purpose acquisition company (SPAC) floated on the exchange last year by investment firm Vector Capital.

The deal implies an enterprise value of $US4.1 billion for Rocket Lab which operates satellite launch facilities in New Zealand and the US.

Announcing the deal, Rocket Lab founder Peter Beck said merging with the Vector vehicle would make Rocket Lab a publicly traded pure-play end-to-end space company.

California-based Vector Capital is a long-established investment firm that focuses on technology in both private and listed markets.

Following the transaction, Vector Capital managing director Alex Slusky will join the board of Rocket Lab.

“This milestone accelerates Rocket Lab’s ability to unlock the full potential of space through our launch and spacecraft platforms and catalyses our ambition to create a new multi-billion-dollar business vertical in space applications,” Beck said.

Slusky said Rocket Lab was ideally positioned to continue to capture market share in the rapidly expanding space launch, systems and applications markets.

After transaction costs, the deal will provide Rocket Lab with access to $US750 million of new investment capital, comprising $US320 million raised by the Vector SPAC last year and a further $US470 million to be raised with the issue of new shares, at $US10 each, to investors including Vector, Blackrock and Neuberger Berman.

Current Rocket Lab investors including Khosla Ventures, Bessemer Venture Partners, DCVC (Data Collective), Promus Ventures, Greenspring Associates, The Future Fund and New Zealand investment fund K1W1, will own 82% of the new entity which will continue to be led by Beck as chief executive.

A new investor will be Potentum Partners, which has invested in the SPAC on behalf of institutional investor clients. Potentum Partners was set up in 2019 by Steve Byrom, Jasmina Osmanovic and Dave Simons, formerly the senior team members of the Future Fund’s private equity strategy. They first met Beck and his team alongside Bessemer Ventures in 2016, before Rocket Lab had launched a rocket into space.

According to Beck, Rocket Lab had been progressing listing plans when multiple SPACs started aggressively pursuing the company. Rocket Lab’s board had decided to merge with the Vector SPAC because of the greater financial clarity it provided compared to an IPO and listing.

Rocket Lab needs substantial additional capital to enable it to finance development of a new larger capacity satellite launch vehicle as well as to continue its growth as a components manufacturer for other space businesses.

Rocket Lab currently uses its Electron rocket for all satellite launches but is developing a larger 8-tonne capacity vehicle, Neutron. Neutron, will be powered by a two-stage re-usable rocket system. The first-stage rocket will return to earth at a predetermined location under its own power.

There will be continuing demand for Electron rockets, Beck says, but Neutron will meet the demands of customers who want to launch large numbers of small satellites. Putting a constellation of satellites in space in one launch will improve overall economics. The larger capacity of Neutron should also ensure close to full capacity for every launch.

The merger deal projects Rocket Lab will become EBITDA positive in 2023 and exceed $US500 million EBITDA in 2027.

Rocket Lab exceeded $US1 billion in value after a $US75 million Series D funding round in early 2017 (APE&VCJ, Apr 2017).

Caption: Rocket Lab chief executive and founder Peter Beck with an Electron rocket.