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The UK government will inject £20mn into lossmaking Anglo-Danish rocket maker Orbex, via a loan aimed at funding the company’s small launcher through to lift-off in Scotland this year.
The company said the government would “become a shareholder” as part of its latest £40mn fundraising round. However, the investment is being made via a convertible loan note.
Neither the government nor Orbex would give details of the conditions that could result in the loan converting to equity, which would leave the state owning a share of the company.
Orbex is one of two British rocket companies that has been supported by the UK government in recent years as part of its strategy to develop launch capabilities in Britain. Its decision to inject £20mn comes amid a tough fundraising environment for space tech.
In October the government hired accountancy firm PwC to investigate Orbex’s financial health and to verify that “all levers including third party financing options, will be, or have been exhausted and addressed prior to evaluation of HMG intervention options”, according to a contract notice published online.
PwC declined to comment.
The UK’s support to Orbex is happening as start-ups across Europe prepare to enter the European Launcher Challenge to develop a medium lift rocket capable of competing with Elon Musk’s SpaceX and Blue Origin, owned by Amazon billionaire Jeff Bezos.
Last December Orbex suspended plans to develop a spaceport at Sutherland in the Scottish Highlands to focus resources on developing the Prime microlauncher, designed to launch small payloads into low Earth orbit, and a bigger rocket, Proxima, which could be a contender for the European Launcher Challenge.
Science and technology secretary Peter Kyle said the investment signalled the UK’s determination to be “a key part of the new space revolution in Europe”.
Phil Chambers, Orbex chief executive said the UK support would be “a strong signal to other private investors, and to the European Space Agency and the EU that we’re serious about being a part of the future of European launch”.
However, a government stake in Orbex could prove controversial after the state’s failed investment in satellite start-up OneWeb.
Having paid $500mn to buy the satellite company out of Chapter 11 bankruptcy in 2020, the UK announced plans two years later to sell its stake to French satellite group Eutelsat in return for a 11 per cent holding in the enlarged group. Eutelsat shares have lost three quarters of their value since the deal was announced.
The UK’s government’s injection of funds into Orbex represents half the £40mn the company had been hoping for in a fundraising launched last year.
In total Orbex has raised £23mn in the series D round, including investments from the Export & Investment Fund of Denmark, Octopus Ventures and private investor Sohaib Abbas.
Chambers said having the UK government as “part of the consortium will really bolster” the final fundraising efforts.
The UK’s support for Orbex will be welcomed by the UK space industry, which has criticised successive governments for a failure to develop a clear space strategy.
Ian Annett, former deputy chief executive of the UK Space Agency and now an independent consultant in the industry, said he supported the investment. “It is a clear signal of the intention to support a competitive launch industry within Europe,” he said. “Having assured access to space, whether for security, economic prosperity or science, will be an important asset for the UK.”
In 2023, the latest year for which accounts are available, Orbex reported pre-tax losses more than doubled to £17.2mn. The company has raised a total of £129mn in public and private funding since it was founded in 2015.
