Redwire Space goes public through SPAC after a year of acquisitions

The space infrastructure conglomerate Redwire Space is preparing to go public, announcing on Thursday that it is the latest in a series of space companies merging with a SPAC.

Redwire, founded last year by private equity firm AE Industrial Partners, merges with special-purpose procurement company Genesis Park, which trades under the GNPK brand. The deal is expected to close by the end of the second quarter, with the merger resulting in Redwire being listed on the New York Stock Exchange.

An SPAC is essentially a shell company that raises money through an initial public offering to acquire another company. Genesis Park shares have risen more than 5% in premarket trading since the announcement, since its previous close of $ 9.87 per share.

“When you look around the industry now, you have a lot of older traditional space players and a lot of these new space participants, a lot of them are before revenue,” Redwire president and CEO Peter told CNBC Cannito.

“Redwire is a kind of hybrid: we offer that middle ground with an extraordinary legacy of flight, but also disruptive technologies.”

The company focuses on space infrastructure, which it estimates is currently a $ 15 billion market.

The Redwire collection of companies includes technologies such as navigation sensors, solar arrays, implementable structure, space production and robotic weapons.

The conglomerate expects to add about $ 170 million in cash to its merger balance sheet. This would include receipts from a $ 100 million PIPE round – or private equity investment – joined by investors Senvest Management and Crescent Park.

The merger rates Redwire at a $ 615 million business valuation, according to the companies. Cannito mentioned that AE Industrial Partners will “remain significantly invested” following the merger, as the largest sole shareholder.

Since AE set up Redwire in June last year, the company has been in a steady period of acquisitions.

Redwire first acquired satellite component company Adcole Space and aerospace company Deep Space Systems and then acquired Made In Space, a specialist in 3D printing.

The conglomerate also took over the satellite technology company Roccor, the engineering service LoadPath, the modular spacecraft manufacturer Oakman Aerospace and the satellite mechanism company Deployable Space Systems.

Overall, according to Redwire, the combined management teams bring more than 50 years of space experience, with over 150 missions.

“We have taken a very different approach to the market here, combining different companies with an extraordinary flying heritage,” Cannito said.

These businesses are “used to being the main partner of the mission for organizations that implement space capabilities,” he added, whether these partners are NASA, the Pentagon or others.

Redwire believes there could be more offers, Cannito said, noting that going public and “having that public capital as its currency significantly increases our attractiveness as a purchasing platform.”

“This allows us to be opportunistic, to continue the already proven track record of M&A,” said Cannito. “I think we will look to achieve some bigger goals and that gives us the opportunity, with the flexibility to do that as needed.”

Redwire brought in $ 119 million in revenue last year, which it expects to grow to $ 163 million in 2021. The company estimates that accelerating revenue to more than $ 1.4 billion by 2025, which Cannito has said it is based on its products.

“The dollar can pivot from government to commercial, and then our profile, in terms of our customer mix, will pivot with it. So it gives us a lot of maintenance power. It allows us to be flexible, to adjust and transform as the market changes, “Cannito said.

Redwire is positive about its cash flow and expects to see its profitability continue and grow to nearly $ 200 million in free cash flow by 2025.

“Our strategy is really to be that main partner of the mission,” Cannito said.

Cannito also pointed to the reduction in the cost of access to space, as well as the growing number of missile builders launching into orbit, as an additional catalyst.

“We are very excited and have a lot of respect for what SpaceX has done with the introduction of the reusable economic launch. We are also excited about all the other launch providers that have entered that space and have done so now, and as a result of increased competition, the cost of launch has decreased. Now there are a lot of options, “Cannito said.

“I think there is a direct correlation between the reduction of launch costs and the demand for space infrastructure,” he added.

In general, Cannito presented its company as a company in the middle of the space economy, which grew to over 420 billion dollars.

“When space wins, Redwire wins,” Cannito said.