The SPAC run is on for space startups, which have been relatively slow in their overall exit pace before the current special purpose acquisitions company merger craze got underway. Rocket Lab is the latest, and likely the most notable to jump on the trend, with a deal that will see it combine with a SPAC called Vector and subsequently list on the Nasdaq under the ticker RKLB, with the transaction expected to close in the second quarter of this year.
Rocket Lab, which got its start in New Zealand, and which still launches rockets there with its HQ now shifted to LA, will have a pro forma enterprise value of $4.1 billion via the transaction, with a total cash balance of $750 million once the deal goes through thanks to a PIPE of $470 million with funds invested via Vector, BlackRock and others. At close, existing Rocket Lab shareholders will retain 82% of the total equity in the combined company.
The launch company was founded in 2006, and is led by founder Peter Beck. In 2013, it opened its California headquarters, and it has already completed its first U.S. launch facility at Wallops Island, Virginia. The company’s Electron launch vehicle can carry small payloads to orbit, and is designed to cater to the growing small satellite market, with a focus on responsive and flexible launch options.
Rocket Lab has performed launches on behalf of the U.S. government, including national security payloads, and that’s a key revenue opportunity for it going forward. Currently, it says it has a backlog of customers, with a projection that it will be “EBITDA positive” in 2023 after adjustments, and fully cash-flow positive by 2024, with a projected run rate of over $1 billion in revenue by 2026.
The company has focused on increasing its ability to launch more frequently in a number of ways. It’s been steadily improving its production capacity, with a focus on its large automated carbon-fiber production capabilities. It has also established its U.S. launch site, as mentioned, and will soon open its second launch pad at its existing New Zealand launch site, which is fully privately owned by Rocket Lab itself. It’s also working on making its Electron vehicle partially reusable, which founder Beck says will help it turn around launches more quickly.
Finally, it also just announced a new heavier-lift launch vehicle called Neutron, with a launch payload capacity of eight tons — around 16,000 lbs.