April 21, 2021

Rocket Lab believes SPAC deal will speed production of Neutron rocket

Rocket Lab expanded its ambitions to go public by combining with a special-purpose acquisition (SPAC) firm as the requirement for the medium-class launch vehicle became more evident. Rocket Lab revealed on March 1 that it would combine with Vector Acquisition Corporation, a special purpose acquisition company set up by venture capital firm Vector Capital. Rocket Lab will receive $745 million in cash from SPAC as well as a subsequent financing phase, valuing the release and space systems business at $4.1 billion when the transaction closes in the second quarter of the year 2020.

Rocket Lab’s founder and CEO, Peter Beck, stated in an interview that the firm has been working “at a genteel pace” toward a more conventional initial public offering (IPO) of the stock for some period. Market research found that the market wanted a larger vehicle than the firm’s current Electron rocket, which prompted the company’s plans to shift. “What the sector requires currently is the correct-sized medium-class vehicle for the purpose of delivering megaconstellations,” he added. “In the future, the bulk of satellites will be in megaconstellations.”

Rocket Lab selected the Neutron vehicle, which can take up to 8,000 kgs into the low Earth orbit, and was confirmed at the very same time as the SPAC contract. According to Beck, creating such a vehicle necessitated raising “huge sums of money,” which could be achieved by going public. “That is essentially why they were revealed at the very same time. He characterized the partnership between the Neutron project and going public as “symbiotic,” saying, “We’re not going to reveal a larger launch vehicle until we have the necessary funding in place to guarantee its production through completion.”

In order to speed up the growth, Rocket Lab selected a SPAC over a conventional IPO. Going public via a SPAC will take a portion of the time it takes to go public via an IPO. “For us, we would like to get started on a major, vigorous program right away,” he stated. “This boost is highly helpful to us because it helps us to speed up the software as well.”

Rocket Lab projects its business to expand steadily in the coming years as well. The business expects revenue to rise from $35 million in the year 2020 to around $1.57 billion in 2027, according to an investor presentation published as a portion of the SPAC contract.   In the year 2020, the company posted –$36 million in consolidated earnings before taxes, interest, depreciation, as well as amortization (EBITDA) but plans to break even in the year 2023 and hit $505 million in the year 2027.