Last month, the fortunes of Richard Branson’s Virgin Orbit were plummeting down to Earth. But little-known investor Matthew Brown appeared out of nowhere, offering a $200 million rescue package to the struggling spaceflight company.
According to documents and email exchanges reviewed by Reuters, within two days of being contacted by Brown, Virgin Orbit’s CEO Dan Hart had secured board backing for a preliminary agreement with the 33-year-old Texas-based investor. Here’s what we know about Brown and how his timely investment could help Virgin Orbit soar again.
Who is Matthew Brown?
Matthew Brown is a relatively unknown investor, based in Texas. He is the founder and CEO of a private equity firm called Lone Star Value Management. Brown’s firm focuses on making long-term investments in undervalued companies, with a track record of delivering solid returns for its investors.
Brown himself is known for his contrarian investment style, which involves betting on companies that are out of favor with the market. He also has a reputation for taking an activist approach to investing, often pushing for changes in company management or strategy to unlock value for shareholders.
How did Brown save Virgin Orbit?
Virgin Orbit is a subsidiary of Richard Branson’s Virgin Group, focused on providing affordable satellite launch services using an innovative air-launch system. However, the company had been struggling financially, as the COVID-19 pandemic hit the space industry hard and caused delays and cancellations of many launches.
In late March, Virgin Orbit suffered a major setback, when its LauncherOne rocket failed to reach orbit during a test flight. The company was already strapped for cash and the failed launch put its future in jeopardy.
Enter Matthew Brown. Brown reportedly reached out to Virgin Orbit’s management team shortly after the failed launch, offering a $200 million lifeline to keep the company afloat. Within two days of the initial contact, Virgin Orbit’s board had approved a preliminary agreement with Brown’s firm, subject to final due diligence.
What does this mean for Virgin Orbit’s future?
If the deal goes through, Brown’s investment could provide much-needed capital to Virgin Orbit, allowing it to continue its operations and pursue its ambitious goals. Virgin Orbit has already secured contracts with several government agencies and private companies, including the US Air Force and NASA, for future satellite launches.
However, the deal is not without risks. Brown’s firm will likely demand a significant say in Virgin Orbit’s management and strategy, as well as a substantial return on its investment. This could lead to conflicts with other investors, including Richard Branson himself, who has reportedly invested over $1 billion in the Virgin Group’s space ventures.
Final Thoughts
Matthew Brown’s timely investment in Virgin Orbit could be a game-changer for the struggling spaceflight company. His contrarian investment style and activist approach may bring a fresh perspective to the company’s management and strategy, while his deep pockets could provide the necessary funding to keep the company afloat.
However, as with any investment, there are risks involved. Brown’s firm will likely demand significant control and returns on its investment, which could lead to conflicts with other stakeholders. Only time will tell if this rescue mission will succeed or crash and burn.
