Seraphim Space, the London-listed investment company focused on commercial space technology, has announced plans to raise up to £350 million to capitalise on a booming space market.
The company said the fundraising, one of the largest by a UK‑listed investment trust, was to take advantage of a “critical inflection point”.
“Recent developments have caused a significant cost reduction in access to space, with lower satellite and launch costs — there are few parts of the global economy that will be unaffected by space,” the company said.
“SpaceTech’s accelerating growth is being driven by global security concerns, desire for climate sustainability and the search for the next generation of infrastructure for telecoms and artificial intelligence.”
The fundraising will be conducted by the issuance of C shares, a separate class of shares that allows the company to raise money without hurting the performance of people who already own the stock. The C shares, valued at £1 each, will convert into ordinary shares at periodic intervals.
Retail investors will be able to participate through RetailBook, a retail investment platform, while there will also be a placing to institutional investors. The retail offer is expected to close on May 6.
The company said the extra capital would strengthen and expand Seraphim Space Investment Trust’s portfolio through deployment into a pipeline of investment opportunities.
Seraphim Space floated on the London Stock Exchange in July 2021 at 100p a share. The shares, which have risen by about 85 per cent since the start of the year, closed down 22½p, or 10.1 per cent, at 200p on Monday.
The company has invested in 45 space technology companies since its creation, many of which are now later-stage or public companies. Nine are worth more than $1 billion, so-called unicorns, while five other companies have been listed on the London Stock Exchange.
Seraphim’s largest holding is ICeye, a Finnish satellite communications company which comprised 39 per cent of the fund’s net asset value at the end of last year. In December, ICeye was valued at $2.4 billion. HawkEye 360, a space analytics company which accounts for around 10 per cent of the company’s portfolio, filed to go public in the United States this month, also targeting a valuation of up to $2.4 billion.
Joachim Klement, head of strategy at Panmure Liberum, said: “The company is one of the star performers in the alternative closed-end fund space and in our view has a bright future with a long growth trajectory in one of the most exciting areas for venture capital at the moment.”
There is growing interest in the ability of space technologies to reshape a wide range of industries, including defence, communications, insurance, and even agriculture.
Seraphim Space’s most recent index covering global space investment showed that funding reached $8.0 billion in the first quarter of the year, more than double the $3.9 billion in the previous three-month period. This pushed the 12-month investment to a record high of $18.8 billion. The figures also showed that investment has moved beyond satellite communications into other areas such as data centres and space stations.
Innovation in the sector has been fuelled by declining launch costs, which have fallen by more than 95 per cent over the last decade. This has been accelerated by SpaceX, the company founded by Elon Musk, which has pioneered the use of reusable rocket technology and maintained a high frequency of rocket launches. Last year, the company completed around 170 orbital launches.
SpaceX is targeting a record-breaking initial public offering this summer, which would help provide investors with a reference point for pricing other space tech companies and could attract further investment into the sector. The company is hoping to raise between $50 billion and $75 billion in fresh capital, which would comfortably surpass Saudi Aramco’s 2019 record for the largest public listing.
Dyslexia is ‘our superpower’
Seraphim Space has said that it backs companies that turn “science fiction into science fact”, a suitably grand ambition for a company that invests in space technologies.
Seraphim Capital was founded by James Bruegger, Rob Desborough, and Mark Boggett in 2006, but the company pivoted to space technology in 2016. It claimed to be “the first fund of its size anywhere in the world to focus on investing in early-stage technology companies emerging from the ‘new space’ revolution”.
At the time, space technology was a relatively untapped market for investors, but the trio saw an opportunity to support early-stage companies putting satellites into orbit. All three have dyslexia, which Boggett has credited with helping them to think differently. He has described it as a “superpower”, which has enabled him to “firmly take a contrarian view”.
“You can sit in a room with 20 people and you’re talking about a subject, and I will come up with a different perspective to the others in the room — and so will my partners,” he told the Winning Podcast.
In 2017, Seraphim Space invested in ICeye, a Finnish satellite communications company which is now the cornerstone of the fund’s portfolio. This was before it had launched its first satellite. The company is now worth $2.4 billion. It has also backed D-Orbit, a company specialising in the last-mile delivery of satellites, and All.Space, which develops intelligent antennas for vehicles to connect to multiple satellites simultaneously.
The space economy is expected to grow rapidly in the coming years thanks to the huge decline in launch costs over the past decade. A recent report from McKinsey estimated that the space economy is projected to reach $1.8 trillion by 2035, up from around $626 billion last year, so the additional capital will enable Seraphim to continue backing high-growth companies.
Analysts at Deutsche Numis said: “The proceeds will allow shareholders to maintain their exposure to the high-growth potential of the spacetech sector by enabling SSIT to invest in new opportunities and ‘double down’ on existing portfolio winners.”