Friday, October 21, 2011

Abu Dhabi Bullish on Virgin Galactic

Abu Dhabi based investment company Aabar Investments has boosted its stake in space tourism company Virgin Galactic by an additional $110 million USD to bring it's total equity in the company to 37.8% from 31.8%.

According to the October 19th, 2011 Wall Street Journal MarketWatch article "Abu Dhabi's Aabar boosts Virgin Galactic stake," Aabar made the additional $110 million investment in Virgin Galactic in July, 2011.

The original July 2009 investment  included an Aabar commitment of $100 million USD to fund a "small satellite launch capability" plus money for construction of a spaceport in Abu Dhabi, the capital of the United Arab Emirates. Other publicly announced Virgin Galactic launch sites include:
According to the October 20th, 2011 post in the Space Business Blog titled "Investing in Virgin Galactic" there are three possible reasons for this additional investment:
  1. Preparations for new growth ( such as nanosat launch vehicles or other new products).
  2. Paying for the delays in reaching commercial operations for its suborbital product.
  3. Building up a war chest for a rainy day (when money is available sometimes you just take it).
Cost overruns and schedule delays seem to be a permanent fixture of space programs (check out the May 4th, 2011 post on the Parabolic Arc website titled "A Look at Cost Overuns and Schedule Delays in Major Space Programs" and the follow up October 21st, 2011 article "Is Richard Branson Hearing Footsteps?" if you believe otherwise). It's therefore likely that this additional cash infusion is simply paying for the earlier delays.

The new  investment information was released as part of a prospectus for a planned bond sale by Aabar's parent, the International Petroleum Investment Company (IPIC).

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