Space company Satellogic SPAC deal valued at $ 1.1 billion

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A satellite image of the stuck container ship Ever Given in the Suez Canal in Egypt, taken on March 25, 2021.

Satellite logic

Earth satellite imagery specialist Satellogic is preparing to go public, announcing Tuesday that it will be the latest in a line of space companies to merge with SPACs.

Satellogic merges with the special purpose vehicle CF Acquisition Corp. V – a Cantor Fitzgerald sponsored SPAC trading under the ticker CFV. The deal gives the space company a $ 1.1 billion stock valuation and is expected to close early in the fourth quarter, resulting in Satellogic being listed on the Nasdaq under the ticker SATL.

A SPAC or special purpose vehicle raises capital from an IPO and uses the proceeds to buy a private company and bring it public.

Satellogic has 17 image satellites in orbit to date, but that’s only a fraction of the number it would take to generate projected annual sales of nearly $ 800 million in four years.

“We will fully grow [satellite] Constellation of 300 satellites by 2025 to get new maps of the entire planet every day, “Emiliano Kargieman, CEO of Satellogic told CNBC.” We believe this will really change the way companies make decisions every day. “

The transaction is expected to raise approximately $ 274 million in cash for the growth of Satellogic, through funds raised by CFV and a $ 100 million PIPE round – or private investment in public equity – led by SoftBank and Cantor Fitzgerald. The company has previously raised more than $ 100 million in venture capital and debt since its inception in 2010, with existing Satellogic investors, Brazilian venture capital fund Pitanga and the Inter-American Development Bank. Chinese giant Tencent was previously an investor in Satellogic, but someone familiar with the matter told CNBC that the company is no longer a shareholder.

“Satellogic is uniquely positioned to dominate the earth observation industry. Its technology, data and analytics have extensive use cases in a myriad of industries, ”said Howard Lutnick, chairman and CEO of Cantor Fitzgerald, in a statement.

CFV shares rose 1.6% in trading from their previous closing price of $ 9.71.

With 240 employees around the world, Satellogic is headquartered in Montevideo, Uruguay, while its research and development team is based across the border in Argentina. The company also has offices in Spain, Israel, the United States and Beijing.

Satellogic is joining a trend of space companies going public through SPAC deals, with Virgin Galactic being the first of the newest generation in 2019. The rocket manufacturer Astra and AST & Science with a focus on satellite broadband are each trading with the companies Rocket Lab, Spire Global, BlackSky, Redwire and Momentus are to follow in the coming months.

The technology

The company’s uSat satellites weigh just 42 kilograms (or 93 pounds) each at launch and are about the size of a kitchen dishwasher. Satellogic signed a multiple launch agreement with SpaceX earlier this year to launch the rest of the 300 satellites for its “Aleph” constellation – named after a short story by Argentine writer Jorge Luis Borges “about an object with which you Seeing everything is happening in the world, “said Kargieman.

Satellogic is vertically integrated, which Kargieman pointed out as “great differentiation that allows us to have a unit economy 60 to 100 times better than any other player in the small satellite market,”

The current ÑuSats take pictures with 70 centimeters per pixel and can cover 300,000 square kilometers of the earth in one day. Combined with a cost of $ 450,000 per satellite, Kargieman says his company has a unit economy that “no one” in the earth imagery market can match.

“For the defense market, you don’t have to focus so much on the unit economy as they are willing to pay a different price for the data,” Kargieman said. “If you really want to deliver mainstream applications like we plan to, you need to be able to deliver it at zero marginal cost.”

The market

The earth imagery market is dominated by demand from defense and intelligence agencies, but is growing for applications in energy, insurance, agriculture, and forestry. Satellite imagery has a total addressable market of $ 140 billion, according to a report by space research firm Euroconsult.

“We think this is a winner that takes most or a winner the whole market,” said Kargieman. “This is a limited supply market – governments just can’t get enough data today; there aren’t enough satellites out there. “

Satellogic aims to be able to map the entire planet weekly through 2023 and daily through 2025 to unlock market opportunities valued at “over 40 billion US dollars”.

“We’ll also have the option to revisit attractions approximately every five minutes so we can give you, for example, a two-minute video of every event that is developing in the world,” said Kargieman.

Satellogic’s investor deck highlighted an oil pipeline monitoring use case as Kargieman said the company ran a pilot program with a large oil and gas company 18 months ago. The company had to monitor about 1,800 miles of the pipeline every other week, which cost about $ 750 per mile, to be checked using airplanes. Satellogic “demonstrated similar detection capabilities at a cost of less than” $ 60 per mile, the company said.

China

While Satellogic’s presence around the world allows it to work with US allies and the company has a local subsidiary, Satellogic North America, to work with the US government, the company also relies on China through its Beijing office.

“We believe that the Chinese market for commercial applications will be very interesting and an emerging market for observations….

The CEO declined to raise concerns about the state ownership structure of many Chinese companies, saying instead that Satellogic is focused on private actors.

“In China, we are selling to commercial operators – information about what is happening within China for consumption within China – so we see no concern,” Kargieman said.

Growth goals

Satellogic posted $ 0 in revenue last year but expects that to grow to nearly $ 7 million in 2021 due to new contracts that began in April.

“Until last year, we’ve been testing more technology in orbit, improving the technology, and validating the commercial model,” Kargieman said.

The company has an order book of approximately $ 38 million in signed contracts to date and predicts a “short-term pipeline” of $ 800 million in opportunities over the next two years, according to an investor slide deck. However, Satellogic must have an annual turnover of over 100 million constellations in orbit.

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