30 July 2009

Abu Dhabi looks to join race to space

The Abu Dhabi investment fund with the biggest stake in Mercedes-Benz’s parent will pay $280 million to buy one third of commercial space travel startup Virgin Galactic.

Aabar Investments of Abu Dhabi ponied up the funds to give Sir Richard Branson’s space tourism plan a boost.

“The initiative will leverage the solid financial backing of Aabar and the pioneering technology and strong global relationships of Virgin Galactic,” Branson said.

Under the terms of the deal, Aabar will buy 32% stake in Virgin Galactic’s holding company. In exchange, the state-controlled investment fund will acquire “exclusive regional rights” to eventually launch Virgin Galactic tourism and scientific research space flights from the United Arab Emirates capital.

In addition, Aabar said it plans to pay an extra $100 million plus transaction costs to fund a program to launch small satellites into orbit and will build spaceport facilities in Abu Dhabi.

Regulators in the U.S. and elsewhere must still approve the deal.

“The significant partnership not only falls in line with Abu Dhabi’s larger plans to inculcate technology research and science at a grassroots level but also complements its aim to be the international tourism capital of the region,” Aabar Chairman Khadem al-Qubaisi said.

Aabar is the first outside investor in the spaceflight company, which Branson’s Virgin Group owns fully. The deal values Virgin Galactic at about $875 million.

Virgin Group has pumped more than $100 million into its space flight venture since forming it in 2004. The company is working to develop flight vehicles with Scaled Composites, the Mojave, Calif.-based aeronautical firm that won the X Prize to build the first privately funded manned space ship.

Virgin Galactic has yet to show it can put paying customers in orbit, or make a profit doing so. It plans to begin testing a new spacecraft, SpaceShipTwo, by the end of this year.

Even without a launch date, Virgin Galactic said it has taken 300 reservations at $200,000 each and is holding $40 million in deposits.

The first paid flights should launch from New Mexico once testing is complete.

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