AST & Science to go public via special purpose acquisition

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Updated Dec. 17 with comments about special-purpose acquisition companies.

SAN FRANCISCO — AST & Science LLC announced plans Dec. 16 to become a publicly traded company through a special purpose acquisition company.

In what is becoming a trend in the industry, AST & Science is merging its business with New Providence Acquisition Corp. as it prepares to trade on the Nasdaq exchange in the first quarter of 2021 under the ticker symbol ASTS.

The transaction is intended to raise money for the company’s campaign to build a space-based cellular broadband network capable of linking standard mobile phones.

As part of the transaction, AST & Science also is rebranding itself as AST SpaceMobile. AST SpaceMobile expects to garner as much as $462 million through the transaction, including up to $232 million in cash from New Providence Acquisition Corp. and an additional $230 million from investors including Rakuten, Vodaphone, American Tower and UBS O’Conner, who have agreed to purchase common stock at $10 per share, through a private investment in public equity agreement.

Abel Avellan, AST SpaceMobile chairman and CEO, will continue to lead the business post-transaction, according to the news release.

“AST SpaceMobile’s low latency, space-based platform will allow hundreds of millions of people across the world to access high-speed, cellular broadband service in areas where there was previously no such service,” Avellan said in a statement. “Working directly with our strategic partners, we are on track in executing on phase one of our commercial launch as we set the stage to bring our game-changing space network for global mobile connectivity.”

New Providence Chairman Alex Coleman said in a statement he sees AST SpaceMobile as a “pioneering company with revolutionary technology, access to a built-in customer base, and a flexible and scalable business model that addresses one of the largest challenges to global connectivity.”

AST SpaceMobile is the third space startup to go public through a special-purpose acquisition company (SPAC), a company that raises money on public markets for the purpose of acquiring a privately held firm. In 2019 Virgin Galactic went public through a merger with a SPAC called Social Capital Hedosophia. In October, in-space transportation company Momentus announced it would merge with a SPAC, a deal still in the process of closing.

“Why we decided to become a public company? Well, we feel that we really fit all the profile for a high-growth public company,” Avellan said in a call with investors, citing a large addressable market, partners and “defensible” technology that would be a barrier to entry for competitors. “That will allow us, with this transaction, to be fully funded, and expect to become operating cash flow positive in 2023.”

SPACs could be a path to going public for other space startups. “I think it’s a really interesting path to liquidity in the space industry, and specifically for the space industry because we don’t have a ton of exits,” said Tess Hatch, a vice president at Bessemer Venture Partners, during a panel discussion at the TC Sessions: Space conference Dec. 16.

The lack of exits, through either going public or acquisitions, has been a barrier for the space industry, she said, because of the limited opportunities for investors to get a return on their investments. “Hopefully, we’ll have in 2021 more paths that space companies pursue to have an exit.”

Mike Collett, founder and managing partner of Promus Ventures, said he was encouraged by the availability of “late-stage” capital that he says is essential for hardware-intensive companies like those in the space industry. “I think it’s a very good thing that the public markets are getting involved to try and finance these.”

Jeff Foust contributed to this article from Washington.