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World View, a maker of stratospheric balloons, will IPO in a deal for $350 million

A new company called World View is entering the public markets with stratospheric balloons for Earth observation and tourism. The firm, which aims to create what it refers to as “the stratosphere economy,” announced on Friday that it would merge with special purpose acquisition company (SPAC) Leo Holdings Corp. II in a $350 million deal.

The merger will give the combined business up to $121 million in gross funds, plus the option to enter into additional equity financing agreements for up to $75 million, according to the agreement, which is anticipated to finalize in the second quarter of this year. The $121 million figure, however, is based on the assumption that there will be no shareholder redemptions. As we’ve seen with other space SPACs, including Virgin Orbit, which we discussed earlier this week, an unexpected amount of redemptions can occasionally significantly reduce that total.

The World View company in Tucson, Arizona, claims that its stratospheric remote sensing balloons have unique advantages over conventional satellites. The company’s remote sensing balloon devices, known as Stratollites, can soar up to 29 km (95,000 ft) in the air and, according to World View, might someday be used in industries ranging from agriculture to defense.

According to World View, that isn’t the only application for the balloons. The company also declared its aim to use the balloons to start a tourism operation in 2021. More than 1,200 people, according to World View, have reserved their spots in line for a flight in a stratospheric balloon; the $500 deposit is just a small portion of the $50,000 ticket cost. Each journey will take 6 to 8 hours.

According to Crunchbase, World View has so far raised $48.9 million, with its most recent investment round having ended in 2018. The business and Sierra Nevada Corp. announced a cooperation to operate balloons for defense intelligence, surveillance, and reconnaissance in November of last year. The Permian Basin in Texas will be monitored by Scepter Inc. and World View under a separate deal that was made public in the same month.

Private companies wishing to reach public markets outside of the conventional IPO procedure and receive a significant cash infusion are increasingly using SPACs as a vehicle. Over the past two years, SPAC transactions have been completed by a number of significant space firms, including Rocket Lab and Planet Labs. While some businesses, like the two I just mentioned, have done rather well on the stock market, space SPACs have generally underperformed, especially when compared to traditional aerospace firms, with a few businesses experiencing a sharp decline in stock price.

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