In July Virgin Galactic announced that it had sold 32 percent of the company to Aabar Investments, an Abu Dhabi-based fund, for $280 million; Aabar would also provide an additional $100 million for the development of a smallsat launch system. Aabar would get exclusive regional rights to host Virgin Galactic flights. The press release included a throwaway line common to such deals: “The transaction is subject to obtaining regulatory clearances in the United States and elsewhere.”
That provision, though, appears to be tripping up the deal, at least temporarily. The Times of London reported early this week that the deal was being held up and even jeopardized by US regulators, specifically the Committee on Foreign Investments in the United States (CFIUS). The deal was undergoing scrutiny by CFIUS, the Times reported, raising concerns among bankers that it could be blocked or called off. Why CFIUS was giving so much attention to the deal wasn’t made clear, although it seemed likely it had something to do with the protection of launch-related technologies that could also have military applications.
Today’s New York Times provides more details, including the fact that the companies agreed to withdraw and resubmit their application to CFIUS to give the arm of the Treasury Department more time to review it. The administration’s concern, as expected, is “whether sensitive rocket and missile launching and fabrication technology might be shared with foreign governments as a result of the transaction”, according to the Times, as well as making sure the deal wouldn’t violate the Missile Technology Control Regime. A Virgin spokesperson told the paper that the companies remained confident that the deal would eventually be approved.
Virgin isn’t the only NewSpace company that will be getting some regulatory scrutiny because of foreign deals. Yesterday XCOR Aerospace announced a deal to supply a South Korean organization with suborbital flight services using the Lynx Mark 2 vehicle the company is developing. While no investment into XCOR is involved, the company will still have to secure export control approvals to transfer the Lynx to South Korea. “To our knowledge, this is the first time that a US commercial suborbital launch vehicle will undergo the export licensing and approval process,” XCOR CEO Jeff Greason said in the statement announcing the deal. “We believe there is no better pathfinder than with our partners at the South Korean Yecheon Astro Space Center.” It still likely won’t be easy, though.