Virgin Galactic SPAC tie-up highlights evolution in equities market

Author: John Crabb | Published: 15 Aug 2019

The decision by space exploration company Virgin Galactic to enter the public markets by means of a merger with a special acquisition purchase company (SPAC), bypassing a traditional initial public offering (IPO), demonstrates the continued evolution of the equities markets.

Virgin Galactic and Social Capital Hedosophia announced their intention to merge on July 8, effectively creating the world's first publicly traded commercial human spaceflight company with an initial value of $1.5 billion.

That such a high profile company has decided to utilise a SPAC rather than going the traditional IPO route is evidence of a market in flux. Alongside instruments such as direct listings (as with Spotify and Slack) or no-vote shares common shares (Lyft, Pinterest, Snap) the increase in SPACs shows a parallel shift away from the days of companies simply selling shares to the public to raise capital.

KEY TAKEAWAYSVirgin Galactic and Social Capital Hedosophia, a...