Richard Branson’s Virgin Galactic has announced plans to go public via a New York cash shell led by former senior Facebook executive Chamath Palihapitiya.

Virgin Galactic, which aims to take passengers into space, said on Tuesday that it would merge with a cash shell led by Mr Palihapitiya, which was launched in 2017 and is publicly traded in New York. Virgin Galactic said the company would have an enterprise value of about $1.5bn.

“By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts,” said Sir Richard.

The cash shell, Social Capital Hedosophia, was pitched by Mr Palihapitiya as a way to bring technology companies to the stock market without the hassle of an initial public offering.

But it has failed to find a willing target until now and was approaching a September deadline when it would have to return the cash to investors.

SCH has raised $700m of cash from its investors. It is paying $300m of this to Virgin’s existing shareholders — Virgin Group and Abu-Dhabi Mubadala Investment Group — for a 49 per cent stake. The remaining $400m of cash will stay in the combined company and Mr Palihapitiya, who will become chairman, is adding $100m of his own money.

Virgin Galactic said the tie-up, which is expected before the end of the year, would provide enough additional capital to start commercial space travel.

The merger comes after Sir Richard halted discussions with Saudi Arabia’s sovereign wealth fund about a planned $1bn investment in Virgin’s space companies after the killing of Saudi journalist Jamal Khashoggi.

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In December Virgin Galactic reached the edge of space for the first time with a test flight that marked a turning point in its attempts to create a new space tourism industry. The company’s plans were delayed following an accident in 2014 that left a Virgin Galactic pilot dead.

Sir Richard is in a race with Blue Origin, founded by Amazon’s Jeff Bezos, and Elon Musk’s SpaceX. SpaceX’s rockets already resupply the International Space Station, which is five times higher than the limit of the Virgin Galactic craft.

Mr Palihapitiya, founder and chief executive of SCH, said: “We are confident that VG is light years ahead of the competition. It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction.”

Via Financial Times