While the United States is sopping up the spilt milk of its economic crisis, Abu Dhabi is busy investing in the next big emerging market: outer space.
Aabar Investments, who recently bought a stake in electric car maker Tesla, is buying 32% of Richard Branson’s space travel company, Virgin Galactic for $280 million.
In return for its investment, Aabar will get exclusive rights to fly people from the Mid-East to the moon, or wherever Virign Galactic plans on flying.
Here’s Adam Schreck of the Associated Press with a full report on the transaction:
DUBAI, United Arab Emirates — The Mideast investment fund with the biggest stake in Mercedes-Benz’s parent said Tuesday it will pay about $280 million to buy nearly a third of commercial space travel startup Virgin Galactic.
The buy-in by Aabar Investments of Abu Dhabi gives British billionaire Sir Richard Branson’s space tourism venture a big financial kickstart at a time when many funding sources have dried up because of the global recession. It also provides the oil-rich Persian Gulf sheikdom a chance to acquire space flight capability of its own.
“The initiative will leverage the solid financial backing of Aabar and the pioneering technology and strong global relationships of Virgin Galactic,” Branson said in a statement.
Under the terms of the deal, Aabar will buy an approximately 32 per cent stake in Virgin Galactic’s holding company. In exchange, the state-controlled investment fund will acquire “exclusive regional rights” to eventually launch Virgin Galactic tourism and scientific research space flights from the United Arab Emirates capital.
In addition, Aabar said it plans to pay an extra $100 million plus transaction costs to fund a program to launch small satellites into orbit, and will build spaceport facilities in Abu Dhabi.
Regulators in the United States and elsewhere must still approve the deal.
“The significant partnership not only falls in line with Abu Dhabi’s larger plans to inculcate technology research and science at a grassroots level but also complements its aim to be the international tourism capital of the region,” Aabar Chairman Khadem al-Qubaisi said.
Aabar is the first outside investor in the spaceflight company, which has been owned fully by Richard Branson’s Virgin Group. The deal values Virgin Galactic at about $875 million.
Virgin Group has pumped more than $100 million into its space flight venture since forming it in 2004. The company is working to develop flight vehicles with Scaled Composites, the Mojave, Calif.-based aeronautical firm that won the X Prize to build the first privately funded manned space ship.
Virgin Galactic has yet to show that it can put paying customers in orbit, or make a profit doing so. It plans to begin testing a new spacecraft, SpaceShipTwo, by the end of this year.
Branson is attending the Experimental Aircraft Association’s annual AirVenture festival in Oshkosh, Wisconsin. The launcher plane for the space ship, dubbed WhiteKnightTwo, is on display at the air fest.
Even without a launch date, Virgin Galactic says it has taken 300 reservations at $200,000 each and is holding $40 million in deposits. Customers include scientist Stephen Hawking and “Superman Returns” director Bryan Singer, according to Virgin Galactic President Will Whitehorn.
The first paid flights are expected to launch from the U.S. state of New Mexico once testing is complete.
Aabar has emerged as one of Abu Dhabi’s most active investment funds. It bought 9.1 per cent of Mercedes-Benz maker Daimler AG in March, and earlier this month bought 4 per cent of San Carlos, California-based electric car producer Tesla Motors.
Abu Dhabi is the richest of the seven semiautonomous sheikdoms that make up the United Arab Emirates, and holds nearly all the country’s vast oil reserves. It has long competed for international attention with neighbouring emirate Dubai, little more than an hour’s drive away.
Copyright © 2009 The Associated Press. All rights reserved.
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