Connect with us

Published

on

Sir Richard Branson is in advanced talks about a multibillion dollar merger to take Virgin Orbit, his satellite launch company, on to the US public markets.

Sky News can reveal that Virgin Orbit is close to finalising a deal to combine with NextGen Acquisition II, a special purpose acquisition company (SPAC) set up by George Mattson, a former Goldman Sachs banker.

Sources said this weekend that NextGen II was in exclusive talks with Sir Richard’s Low Earth Orbit satellite business, which is 80%-owned by the tycoon’s Virgin Group empire.

Mubadala, the Abu Dhabi sovereign fund, owns the remaining 20% of Virgin Orbit’s shares.

A definitive deal valuing Virgin Orbit at approximately $3bn (£2.1bn) could be announced in the coming weeks, according to insiders.

Concluding a SPAC merger would represent a further vindication of Sir Richard’s efforts to construct a multibillion dollar business empire in the burgeoning space technology sector.

In 2019, he merged Virgin Galactic, his space tourism operation, with Social Capital Hedosophia, another SPAC, in a deal which heralded the ongoing deluge of so-called ‘blank cheque’ companies.

More from Business

SPACs raise funds from investors to secure an unidentified acquisition, with hundreds of the vehicles being created by prominent financiers, businesspeople and celebrity sponsors during the last two years.

Virgin Orbit has been seeking a SPAC deal for several months and has engaged in talks with multiple prospective partners, according to people close to the process.

The choice of NextGen is a logical one, since Mr Mattson is a director of Virgin Galactic, and is an experienced aviation industry insider, having also been a director of Delta Air Lines for nearly nine years.

He was previously a Goldman partner working with clients in the general industrials sector for a decade.

Virgin Orbit is part of a fast-growing sector focused on launching satellites for commercial and government clients.

The company received another burst of publicity this week when Boris Johnson was pictured in front of one of its LauncherOne rockets at Newquay’s Spaceport ahead of the G7 Summit.

In January, it launched ten small satellites into space from its Californian base, with the next launch scheduled for the end of this month.

Rocketlabs, a larger rival to Virgin Orbit, is the only other commercial small satellite operator to have achieved that milestone.

The maiden launch for Sir Richard’s company from the Cornish site could take place as soon as the end of next year.

It also plans to launch from California, Guam and Japan, and is considering further launch sites around the world.

Virgin Orbit was spun out of Virgin Galactic four years ago, and is now run by chief executive Dan Hart, a former Boeing executive.

It deploys a novel launch system using a converted Virgin Atlantic passenger plane which is now called Cosmic Girl.

Analysts at Morgan Stanley have forecast that the global space industry could be worth more than $1trn by 2040.

Rapid growth is expected after that as commercial satellite usage expands to satisfy demand from communications and other technology companies.

This week, Seraphim Capital confirmed a Sky News report that it is planning a £250m London flotation, having backed a number of space ‘unicorns’, including Arqit, a British quantum encryption company.

Arqit itself has just unveiled plans to go public via a SPAC, with Virgin Orbit among the investors in the deal, having also agreed an alliance as Arqit’s satellite launch partner.

Arqit said on Friday that it had struck a deal with six governments to launch a series of federated quantum satellites.

David Williams, the businessman who created Arqit, was also the founder of Seraphim and has established himself as one of the most influential executives in the UK space industry.

Among the remaining questions relating to Virgin Orbit’s SPAC merger will be the size and backers of its so-called PIPE – referring to the private investors in public equity which will help to fund the deal.

For Sir Richard, the crystallisation of a $2.5bn paper windfall by taking Virgin Orbit onto the New York stock markets will add another sizeable chunk to his wealth.

The businessman has sold hundreds of millions of pounds of Virgin Galactic stock over the last 15 months to invest in his consumer-facing companies, but retains a roughly-25% stake valued at over $2bn based on Friday’s closing share price.

Sir Richard’s $4.5bn space-related paper fortune has helped to weather the impact of the pandemic on his other consumer and travel businesses.

Virgin Active and Virgin Atlantic have narrowly staved off bankruptcy since the start of the coronavirus outbreak, with Sir Richard among creditors having injected substantial sums to keep them afloat.

At one point last year, he pleaded for the UK government to intervene to prop up Virgin Atlantic and warned that he might even seek to mortgage his private Caribbean island, Necker, in order to raise funds.

He is now involved in a race with Jeff Bezos to be the first ‘space billionaire’ to make it into orbit after the Amazon founder said that he and his brother would join the inaugural crewed flight of his New Shepard rocket-ship next month.

Virgin Orbit is being advised by Credit Suisse and Liontree Advisors, while Goldman is acting for NextGen on the merger talks.

A Virgin Orbit spokesman declined to comment on Saturday, while NextGen could not be reached for comment.

Continue Reading

Business

Interest rate cut to 4.25% by Bank of England

Published

on

By

Interest rate cut to 4.25% by Bank of England

The Bank of England has cut interest rates from 4.5% to 4.25%, citing Donald Trump’s trade war as one of the key reasons for the reduction in borrowing costs.

In a decision taken shortly before the official confirmation of a trade deal between Britain and the United States, the Bank’s monetary policy committee (MPC) voted to reduce borrowing costs in the UK, saying the economy would be slightly weaker and inflation lower in part as a result of higher tariffs.

However, it stopped short of predicting that the trade war would trigger a recession.

Money latest: What rate cut means for you

Further rate cuts are expected in the coming months, though there remains some uncertainty about how fast and how far the MPC will cut – since it was split three ways on this latest vote.

Two members of the nine-person MPC voted to reduce rates by even more today, taking them down to 4%. But another two on the committee voted not to cut them at all, leaving them instead at 4.5%.

In the event, five members voted for the quarter point cut – enough to tip the balance – with the accompanying minutes saying that while “the current impact of the global trade news should not be overstated, the news was sufficient for those members to judge that a reduction in Bank Rare was warranted.”

Even so, the Bank’s analysis suggests that while higher tariffs were likely to depress global and UK economic growth, and help push down inflation, the impact would be relatively minor, with growth only 0.3% lower and inflation only 0.2% lower.

Governor, Andrew Bailey, said: “Inflationary pressures have continued to ease, so we’ve been able to cut rates again today.

“The past few weeks have shown how unpredictable the global economy can be. That’s why we need to stick to a gradual and careful approach to further rate cuts. Ensuring low and stable inflation is our top priority.”

Read more:
Federal Reserve eyes impact from Trump tariffs

The Bank raised its forecast for UK economic growth this year from 0.75% to 1%, but said that was primarily because of unexpectedly strong output in the first quarter.

In fact, underlying economic growth remains weak at just 0.1% a quarter.

It said that while inflation was expected to rise further in the coming months, peaking at 3.5% in the third quarter, it would drop down thereafter, settling at just below 2% towards the end of next year.

Continue Reading

Business

Trump set to announce US will agree trade deal with UK, Sky News understands

Published

on

By

Trump set to announce US will agree trade deal with UK, Sky News understands

Donald Trump is set to announce that America will agree a trade deal with the UK, Sky News understands.

A government source has told Sky’s deputy political editor Sam Coates that initial reports about the agreement in The New York Times are correct.

Coates says he understands a “heads of terms” agreement, essentially a preliminary arrangement, has been agreed which is a “substantive” step towards a full deal.

Three sources familiar with the reported plans had earlier told the New York Times that the US president will announce on Thursday that the UK and US will agree a trade deal.

Shortly after the report emerged the value of the British pound rose by 0.4% against the US dollar.

Mr Trump had earlier teased that he would be announcing a major trade deal in the Oval Office at 10am local time (3pm UK time) on Thursday without specifying which country it had been agreed with.

Writing in a post on his Truth Social platform on Wednesday, he said the news conference announcing the deal would be held with “representatives of a big, and highly respected, country”.

More from US

He did not offer more details but said the announcement would be the “first of many”.

A White House spokesperson has declined to comment on the New York Times report.

Senior Trump officials have been engaging in a flurry of meetings with trading partners since the US president announced his “liberation day” tariffs on both the US’ geopolitical rivals and allies on 2 April.

Mr Trump imposed a 10% tariff on most countries including the UK during the announcement, along with higher “reciprocal” tariff rates for many trading partners.

However those reciprocal tariffs were later suspended for 90 days.

Britain was not among the countries hit with the higher reciprocal tariffs because it imports more from the US than it exports there.

However, the UK was still impacted by a 25% tariff on all cars and all steel and aluminium imports to the US.

A UK official said on Tuesday that the two countries had made good progress on a trade deal that would likely include lower tariff quotas on steel and cars.

Read more:
UK chancellor outlines red lines for US trade deal
Will MPs get a vote on a trade deal with Donald Trump?

Please use Chrome browser for a more accessible video player

Trump Tariffs: How the 10 days unfolded

Mr Trump said the same day that he and top administration officials would review potential trade deals with other countries over the next two weeks to decide which ones to accept.

Last week he said that he has “potential” trade deals with India, South Korea and Japan.

Asked on Sky News’ Breakfast programme about the UK-EU summit on 19 May and how Mr Starmer would balance relationships with the US and EU, Coates said: “I think it is politically helpful for Keir Starmer to have got the heads of terms, the kind of main points of a US-UK trade deal, nailed down before we see what we have negotiated with the EU — or, more importantly, Donald Trump sees what we have negotiated with the EU.”

Coates said there was “always a danger” that if it happened the other way around, Mr Trump would “take umbrage” at negotiations with the EU and “downgrade, alter or put us further back in the queue” when it came to a UK-US trade deal.

US and Chinese officials to discuss trade war

It comes as the US and China have been engaged in an escalating trade war since Mr Trump took office in January.

The Trump administration has raised tariffs on Chinese goods to 145% while Beijing has responded with levies of 125% in recent weeks.

US Treasury secretary Scott Bessent and US trade representative Jamieson Greer are set to meet their Chinese counterparts in Switzerland this week to discuss the trade war.

China has made the de-escalation of the tariffs a requirement for trade negotiations, which the meetings are supposed to help establish.

Continue Reading

Business

UK-India trade deal: Is Farage right to call out ‘big tax exemption’?

Published

on

By

UK-India trade deal: Is Farage right to call out 'big tax exemption'?

Britain’s trade deal with India has created a pocket of controversy on taxation.

Under the agreement, Indian workers who have been seconded to Britain temporarily will not have to pay National Insurance (NI) contributions in the UK. Instead, they will continue to pay the Indian exchequer.

The same applies to British workers in India. It avoids workers from being taxed twice for a full suite of benefits they will not receive, such as the state pension.

Money latest: How dynamic pricing is coming to UK restaurants

Politicians of all stripes have leapt to judgement.

Nigel Farage has described it as a “big tax exemption” for Indian workers. He said it was “impossible to say how many will come,” with the Reform Party warning of “more mass immigration, more pressure on the NHS, more pressure on housing.”

But, is this deal really undercutting British workers or is it simply creating a level playing field?

More from Money

Be wary of any hasty conclusions. In the absence of an impact assessment from the government, it is difficult to be precise about any of this. However, at first glance, it is unlikely that some of Reform’s worst fears will play out.

Please use Chrome browser for a more accessible video player

Whisky boss toasts India trade deal

Firstly, avoiding double taxation is not the same thing as a “tax break.’ This type of agreement, known as a double contribution convention, is not new.

Britain has similar arrangements with other countries and blocs, including the US, EU, Canada and Japan.

It’s based on the principle that workers shouldn’t be paying twice for social security taxes that they will not benefit from.

Please use Chrome browser for a more accessible video player

UK-India trade deal explained

Indian workers and businesses will still have to pay the equivalent tax in India, as well as sponsorship fees and the NHS surcharge.

Crucially, the deal only applies to workers being sent over by Indian companies on a temporary basis.

Those workers are on Indian payroll. It does not apply to Indian workers more generally. That means businesses in the UK can’t (and won’t) suddenly be replacing all their workers with Indians.

Read more:
What’s in the UK-India trade deal?
India trade deal: The devil is in the detail

The conditions for a company to send over a secondee on a work visa are restrictive. It means it’s unlikely that these workers will be replacing British workers.

However, It does mean that the exchequer will not capture the extra national insurance tax from those who come over on this route.

The government has not shared its impact assessment for how many extra Indians they expect to come over on this route, how much NI they will escape, or how much this will be offset by extra income tax from those Indians. The net financial position is therefore murky.

Continue Reading

Trending