The Mubadala Investment Co. filed a 13D ownership statement with the Securities and Exchange Commission on Aug. 8 that says it and its affiliates own 7.1% of Virgin Galactic (NYSE:SPCE). While a bet on Richard Branson’s commercial spaceline might be risky for the average investor, SPCE stock is just one of the many bets Mubadala Investment Co. has made on behalf of Abu Dhabi.
Normally, InvestorPlace contributors cover current news affecting the companies they’re writing about. In the case of Virgin Galactic, not much is happening other than it’s preparing VSS Unity for its first flight into space from its Spaceport America base in the New Mexico desert. The flight’s expected later in the fall.
In the meantime, I’ve got to have something to discuss for today’s article that’s interesting to readers.
Hmm. What could that be?
The Virgin Galactic Family Grows
On Oct. 27, the company announced the hiring of two new test pilots. They are Jameel Janjua and Pat Moran. Ultimately, the duo will fly commercial flights for Virgin Galactic.
“Both Jameel and Patrick bring a wealth of aircraft flight and flight test experience; they were picked from a small group of specialized pilots who meet the strict criteria needed to be considered for the role of a Virgin Galactic Pilot,” the company’s Oct. 27 press release stated.
“Each of them has flown in both military and commercial roles, involving training, operations and test, as well as flying passengers and managing crew.”
As you can see by their backgrounds, Janjua and Moran are no ordinary pilots.
For now, however, they’ll enter a training program to learn all about flying SpaceShipTwo — the first SpaceShipTwo was called VSS Enterprise; it crashed in 2014, killing a pilot — VSS Unity, the second SpaceShipTwo, was christened by Stephen Hawking in 2016.
The pilots will also learn to fly the WhiteKnightTwo carrier aircraft VMS Eve, used to carry SpaceShipTwo to 45,000 feet, where it is released into space.
Virgin Galactic plans to have five SpaceShipTwo crafts and two WhiteKnightTwo in service by 2023.
Mubadala and SPCE Stock
As I said in the opening, except for the pilots’ hiring, there isn’t much to bite into when it comes to Virgin Galactic’s business happenings at the moment, so I thought I’d dig a little deeper into the Mubadala investment.
The 13D refers to the Oct. 25, 2019 stockholders agreement Mubadala and three of its affiliates entered into with Vieco USA, Richard Branson’s investment vehicle for holding the SPCE ownership stake.
Essentially, it states that Mubadala and its affiliates will vote with Branson and Chamath Palihapitiya, who together own more than 40% of Virgin Galactic.
However, if you dig deeper, you will see that Mubadala’s relationship with Virgin Galactic goes all the way back to 2010 when Aabar Investments acquired a 31.8% stake in the company.
And if you look very closely at the 2019 merger document between Palihapitiya’s special purpose acquisition company (SPAC), Social Capital Hedosophia, and Virgin Galactic, you will see that Mubadala affiliate Aabar Space Inc. owned 19.3% of Vieco 10 Limited (V10), a Virgin Group affiliate. Virgin Investments Limited owned the remaining 80.7% of V10.
At the time of the combination, Vieco USA owned 63.1% of the merged entity. That translates to Mubadala owning 12.2% of Virgin Galactic in October 2019, which means Mubadala’s actually sold about 42% of its holdings in Virgin Galactic.
That makes sense when you consider that Richard Branson was forced to sell down his Virgin Galactic holdings from 58.6% (114.8 million shares) in mid-March to 29.7% (62.4 million shares) at the end of July.
At that point, Mubadala’s Virgin Galactic shares held within V10 were distributed to Aabar Space. Hence the 13D filing on Aug. 8.
Mubadala didn’t make a new investment, as many media outlets have implied.
As veteran broadcaster Paul Harvey used to say, “Now you know the rest of the story.”
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
