Investing in Space

Space infrastructure conglomerate Redwire to go public via a SPAC

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Key Points
  • Space infrastructure conglomerate Redwire Space is preparing to go public via a SPAC, the company announced Thursday.
  • Redwire, formed last year by private equity firm AE Industrial Partners, is merging with special purpose acquisition company Genesis Park.
  • "Redwire is kind of the hybrid: We're offering that middle ground of tremendous flight heritage but also the disruptive technologies," Redwire Chairman and CEO Peter Cannito told CNBC.
Redwire chief operating officer Andrew Rush shows former NASA administrator Jim Bridenstine a spacecraft model of subsidiary Made In Space.
Redwire Space

Space infrastructure conglomerate Redwire Space is preparing to go public, announcing Thursday that it is the latest in a string of space firms to merge with a SPAC.

Redwire, formed last year by private equity firm AE Industrial Partners, is merging with special purpose acquisition company Genesis Park, which trades under the ticker GNPK. The deal is expected to close by the end of the second quarter, with the merger resulting in Redwire listing on the New York Stock Exchange.

A SPAC is essentially a shell company that raises money through an initial public offering to acquire another firm. Genesis Park's stock rose more than 5% in premarket trading after the announcement, from its previous close of $9.87 a share.

"When you look around the industry now, you have a lot of the older traditional space players and you have a lot of these new space entrants, many of them are pre-revenue," Redwire Chairman and CEO Peter Cannito told CNBC.

"Redwire is kind of the hybrid: We're offering that middle ground of tremendous flight heritage but also the disruptive technologies."

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

Redwire's collection of firms includes technologies such as navigation sensors, solar arrays, deployable structure, in-space manufacturing and robotic arms.

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

The merger values Redwire at a $615 million enterprise valuation, according to the companies. Cannito noted that AE Industrial Partners will "stay significantly invested" following the merger, as its largest single shareholder.

Redwire Space

Redwire represents the seventh space venture in the past year to announce a SPAC deal, following Rocket Lab, Spire Global, BlackSkyAstraAST & Science, and Momentus.

Redwire's year of acquisitions

Since AE formed Redwire last June, the company has been on a steady spree of acquisitions.

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

The conglomerate also snapped up satellite technologies firm Roccor, engineering service LoadPath, modular spacecraft builder Oakman Aerospace and satellite mechanisms company Deployable Space Systems.

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

"We've taken a very differentiated approach to the market here by combining different companies with extraordinary flight heritage," Cannito said.

Redwire Space

These businesses are "used to being that premier mission partner to organizations that are deploying space-based capabilities," he added, whether those partners are NASA, the Pentagon or others.

Redwire believes more deals may be ahead, Cannito said, noting that going public and "having that public equity as a currency significantly increases our attractiveness as an acquiring platform."

"This allows us to be opportunistic, to continue our already proven track record of M&A," Cannito said. "I think we're going to be looking to do some bigger targets and this gives us the opportunity, with the flexibility to do that as required."

Over $160 million projected 2021 revenue

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

"The dollars may pivot from government to commercial, and then our profile, in terms of our mix of customers, will pivot along with it. So it gives us a lot of staying power. It allows us to be flexible and to adjust and morph as the market changes," Cannito said.

Redwire Space

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

"Our strategy is really about being that premier mission partner," Cannito said.

A composite image showing a Falcon 9 rocket booster lifting off and a few minutes later landing back near the launchpad.
SpaceX

Cannito also emphasized the reduction in cost of accessing space, as well as the growing number of rocket builders launching to orbit, as an additional catalyst.

"We're really excited and have a lot of respect for what SpaceX has done with the introduction of economical reusable launch. We're also excited about all of the other launch providers that have entered into that space and have now, and as a result of the increased competition, driven down the cost of launch. There's a lot of options now," Cannito said.

Redwire Space

"I believe that there's a direct correlation between reductions in launch costs and demand for space infrastructure," he added.

Overall, Cannito pitched his company as a firm that's in the middle of the space economy, which has grown to more than $420 billion.

"When space wins, Redwire wins," Cannito said.

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