Space sector hots up with SPAC and family office involvement

Cellular phone pioneer Craig McCaw has become the latest billionaire to join the space race through a $2.1 billion deal to merge Holicity, his blank-cheque Spac, with Astra, a rocket launching company.

The deal is likely to stoke more interest in space deals by family offices who have become key backers to the sector.  According to Space Capital,  the private sector invested $25.6 billion in space during 2020, pushing the total to $178 billion over ten years. 

Other space billionaires are led by Elon Musk, Jeff Bezos, Sir Richard Branson and Sunil Bharti Mittal, who is backed by the UK Government.  

Relativity Space recently raised $500 million via a fundraiser led by Tiger Global Management to progress its plans to commercialise 3D printing in space. Other backers include Spencer Ragoff, founder of Zillow, Mark Cuban and Republic Labs, which syndicates opportunities to family offices. 

Jeff Bezos is investing $1 billion a year in his space venture, Blue Origin. He has stepped down as Amazon CEO to devote more time to it. 

Ed Freedman plans to join the space party through a merger of a Spac, backed by his Stable Road Capital family office with space cargo specialist Momentus. 

But Momentus has been obliged to accept the resignation of its Russian chief executive Mikhail Kokorich to satisfy US security concerns. Chief revenue officer Dawn Harms is interim CEO.

A common link between Musk, Bezos and Mittal involves their launching low-orbiting satellites to transmit data. The Chinese government is extremely active in this area. 

The idea has also interested Craig McGaw who started out in a family cable TV business and went on to develop McCaw Cellular, which he sold to AT&T for $12.6 billion. 

He launched Teledesic in 1990 with Boeing and Bill Gates, then Microsoft chairman, which tried, but failed, to develop low-cost satellites for internet services. Microsoft is now working with Elon Musk to develop satellite-based internet services. 

Bill Gates, McCaw’s long-standing business partner, is a shareholder in Holicity.  BlackRock has confirmed it is backing the deal.

Randy Russell, another McCaw partner, is a former big shot telecom investment banker at Bank of America. He also worked at Pendrell Corporation, an owner of intellectual copyrights.

McCaw agreed to the Astra deal following a successful December launch for Astra’s Rocket 3.2 in December, even though it narrowly missed its orbiting objectives. Astra CEO Chris Kemp will stay in position and Craig McCaw will join the board. 

Astra has currently booked $150 million in launch revenue, although this is smaller than the $2 billion logged by Elon Musk’s SpaceX last year. 

Holicity’s shares have risen 57% since news of the deal broke. Cathie Wood’s Ark Invest has further boosted the sector by filing to launch an ETF to invest in listed space stocks.