Rocket Lab to go public via SPAC merger

The business has received $215 million in private funding in the past four years as it started transporting commercial payloads. A second launch site in the US – the first is in New Zealand – came online in 2020 with a view to increasing launch frequency to weekly.

New Zealand's K1W1 took part in Rocket Lab's $75 million Series D in 2017, which doubled total funding to date and gave the company a valuation of $1 billion. Australia's Future Fund then led a $140 million Series E in 2018. This featured Greenspring Associates, Khosla Ventures, Bessemer Venture Partners, Data Collective, Promus Ventures, K1W1, and New Zealand's Accident Compensation Corporation.

Steve Byrom, former head of private equity at Future Fund and now co-founder of institutional advisory firm Potentum Partners, which has also taken investors into Rocket Lab, said in a LinkedIn post that he first met the team in 2016 through Bessemer Venture Partners.

"At that stage, Rocket Lab had not launched a rocket into orbit but had ambitions to revolutionize the design, manufacture deployment of launch vehicles. Certainly not an investment without risk - it could quite literally blow up! A large driver of our decision to invest was the passion and relentless execution of Pete Beck and the Rocket Lab team," he said. Byrom added that the company has continually exceeded expectations, achieving multiple technical milestones.

The SPAC in question is Vector Acquisition Corporation, which was launched last year by US private equity firm Vector Capital and raised $300 million. It will contribute $320 million to the deal and take a 7% interest in the merged entity. The SPAC sponsor will hold 2%. Sponsors typically receive a 20% stake in the SPAC – not in the merged entity – for a nominal sum on completion of the listing.

In addition, institutional investors are participating in a $467 million private placement for a 10% holding, according to a filing. The bulk of the equity – $3.96 billion – comes from existing investors in Rocket Lab who are rolling over their interests. They will have an 82% stake in the merged entity. The transaction will leave Rocket Lab with $745 million on its balance sheet to support growth.

Founded in 2006 by Peter Beck, Rocket Lab provides end-to-end mission services that provide reliable access to space for civil, defense, and commercial customers. It has developed the Electron and Neutron launch vehicles and the Photon spacecraft platform. Since its first orbital launch in 2018, the Electron has become the second most frequently launched US rocket after SpaceX.

Neutron, the most recent addition, is an advanced 8-ton payload class launch vehicle tailored for mega-constellation deployment, interplanetary missions, and human spaceflight. Electron focuses on small satellites of up to 300 kilograms.

With rockets that incorporate lightweight materials and new technologies such as 3D printing, the company aims to become the low-cost global space provider of choice. It has completed 18 launches to date, delivering 97 satellites to orbit for more than 20 customers, among them NASA, the Defense Advanced Research Projects Agency (DARPA), the UK's Royal Air Force, Spaceflight, and Canon.

Rocket Lab generated $48 million in revenue in 2019, up from $13.5 million the previous year, all of it from launch services. Adjusted EBITDA was negative, narrowing from $32 million to $24 million, according to a presentation.

The company is projected to reach $1.57 billion in revenue and $505 million in EBITDA by 2027. Launch services will still account for the majority of revenue, but a sizeable contribution is expected from space systems, including satellite-as-a-service and spacecraft-as-a-service offerings. The Photon platform already has missions booked to the Moon, Mars, and Venus.

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• Topics
• Australasia
• Technology
• IPO
• North America
• Australia
• Future Fund
• New Zealand
• SPAC
• space
• Bessemer Venture Partners
• Greenspring Associates
• Accident Compensation Corporation (ACC)