SPAC provides a “supercharger” for growth

Rocket Lab will go public in the next few months through a SPAC merger, and CEO Peter Beck spoke with CNBC to break down the space company’s opportunities due to the cash flow of the transaction.

“It’s just like an overload – we have all the things we need now to go and do the things we dreamed of,” Beck said.

The company is merging with Vector Acquisition in a $ 4.1 billion deal for Rocket Lab, and the move is expected to be completed in the second quarter.

Rocket Lab is the leader in the small launch market, with its Electron rocket carrying almost 100 small satellites into orbit in the last two years. The company has also built a spacecraft manufacturing business to provide customers with a versatile platform that pairs with its rockets.

But now, with cash receipts of about $ 750 million expected from the IPO, Rocket Lab will build a larger rocket called the Neutron. The launch market is divided into three sections – small, medium and heavy lift – and Neutron will target that medium section.

In addition, Rocket Lab will build Neutron in accordance with the requirements for launching a spacecraft carrying people, in order to launch astronauts to the International Space Station.

Beck expects Rocket Lab to spend about $ 200 million on Neutron’s development, adding that the rest of the company’s capital will go toward expanding the company’s existing business lines and making acquisitions.

“We have strong uses for all this money,” Beck said.

Beck noted the history of Electron’s successful launches and the company’s multi-customer relationships as a catalyst for his decision to build Neutron – despite the fact that in previous years he had proclaimed Electron to be the largest rocket he would ever build. develop his company.

“We now understand where everyone is going and we understand everyone’s business plan,” Beck said.

Rocket Lab expects “most of the satellites launched” in the next few years to be for constellations – the name of the space network for satellite networks, with tens to thousands of spacecraft working together.

The neutron is designed to be more than twice as tall as Electron and capable of carrying up to 8,000 kilograms in Earth’s lower orbit. That would put it in the same class of capacity as the Russian Soyuz rocket, which Beck noted was “the most prolific rocket launched in history.”

“If you go and produce a vehicle in this class, you would be careful not to make sure it is capable of human spaceflight,” Beck said.

Rocket Lab expects Neutron to launch for the first time by 2024, with Beck noting that the company will make additional efforts to “ensure that it is certifiable for human spaceflight.”

Currently, the only American company that regularly flies astronauts is SpaceX, NASA at the end of last year certifying the Falcon 9 rocket for human space flight. These certification requirements include design elements, from fuel tanks to redundancy strategies, Beck noted.

Given that it would be similar in terms of Soyuz capabilities in Russia, Beck said the Neutron will be able to lift a spacecraft containing three people – although this will depend on the design of the spacecraft.

The Neutron booster – the bottom and most expensive part of the rocket – will also be reusable, similar to how SpaceX lands its Falcon 9 rocket amplifiers. Rocket Lab has tested a method of recovering its electron amplifiers, about which Beck said he informs the company’s plans for Neutron.

The neutron will be launched from the platform the company built at NASA’s Wallops flight facility in Virginia.

While the company’s missile and spacecraft production is taking place at its headquarters in Long Beach, California, Rocket Lab will look elsewhere to build a new neutron production plant.

“One of the things I’m selling a lot of is building near the launch site,” Beck said. “Being able to build close to the launcher I think will be a real key element for this vehicle.”

The neutron factory would bring with it hundreds of jobs. Although he did not specify which cities or regions are being considered, Beck noted that Rocket Lab is “currently conducting a competitive process to find out exactly where.”

Rocket Lab expects many elements of Electron to be transferred directly to Neutron, with Beck promoting a common product line for items such as avionics or electronics.

The ultimate goal for Neutron is “an excellent horse” that can be reused, Beck said.

This means developing a new vehicle structure, as he stressed that the carbon composites that make up Electron missiles are a challenge, given the heat endured during the re-entry process. Rocket Lab is analyzing harder materials, Beck said, so that neutron amplifiers can be reused frequently.

Neutron engines are another obstacle, which Beck acknowledged is the one that takes the longest to develop when building a rocket.

Rocket Lab will not use a variant of the 3D-printed Rutherford engines that power Electron missiles, as Beck said that “there is no improvement to a Rutherford approaching from a distance” to power the Neutron.

“But it’s not like we haven’t built an engine before,” Beck said, adding that the company has “in-depth knowledge of additive production for engines that will be based on the new engine program.”

Building an amplifiable production line is the most “painful” part of building an orbital missile, Beck said – an idea, SpaceX founder Elon Musk pointed out similarly to his company’s Starship missiles.

“Elon and I unanimously agree that the hardest part of entering orbit for the first time is actually scaling production to do it again and again,” Beck said.

Rocket Lab’s experience of building Electron and then scaling production to an almost monthly launch rate are lessons learned that Beck said will inform how the company builds Neutron and its manufacturing.

Rocket Lab is one of six space companies that have announced transactions with special purpose procurement companies in recent months, a growing industry trend as companies seek capital. Beck noted that Rocket Lab was “on a very methodical path to a traditional IPO” before considering merging with a SPAC.

“What this allows us to do is accelerate not only the path, but also the ability to execute the projects we want,” Beck said.

He also pointed out that Rocket Lab is building a verticalized space platform – developing everything in-house, from engines to spacecraft components.

This belief is reflected in Rocket Lab’s financial forecasts, with space systems set to generate almost as much as the company’s launch, estimated at $ 1.6 billion in revenue by 2027.

“It’s a fundamental belief that if you have a launch vehicle and satellites and satellite components and you’re vertically integrated, your ability to do truly meaningful things in the space applications market is unmatched,” Beck said.

Beck said the faith is “playing in real time” with SpaceX’s Starlink satellite internet project. He believes that other satellite broadband companies find it “difficult to compete with the launch of Starlink” because SpaceX has both its own production and its rockets.

“One of the things I did [at Rocket Lab] over the last decade it has been a truly methodical approach to building all the infrastructure we need within the company to go and execute on some really big things in the application market, ”Beck said.

As for differentiating his company from other space SPACs, Beck said Rocket Lab is about “proven execution.”

“We are very good at doing what we say we can do,” Beck said. “There are a lot of promises and a lot of aspirations in this industry. What I’ve always been very careful about is that we don’t talk about anything until we do it or have a lot of confidence.”

Transparency in the financial execution of aspirations is “the wonderful thing about a public market,” Beck added. For investors who want to buy in the space sector, Beck said to “look at our history and make your own decision.”

“We are very excited to bring a high quality space asset to market,” Beck added. “What you get with Rocket Lab is a proven company and a prudent management team, which has proven to offer and will continue to do so.”

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