Private Equity Investments Beyond Earth Orbits: Can Space Exploration be the New Frontier for Private Investments?

Paper number

IAC-05-E3.3.01

Author

Mr. Jeph Mathurin, Aperture Financial, United States

Coauthor

Mr. Nicolas Peter, European Space Policy Institute (ESPI), Austria

Year

2005

Abstract

The year 2004 can be considered an important milestone for space activities.  First, on January 14, 2004 President Bush announced a new vision for human and robotic space exploration named “A Renewed Spirit of Discovery”.  This new space exploration policy called for “a sustained and affordable human and robotic program to explore the solar system and beyond” and seeks also to “promote international and commercial participation in space exploration to further U.S. scientific, security, and economic interests”.  

Secondly, the satellite industry has experienced a trend of private investment fund acquisitions. Five of the six major fixed and mobile satellite service providers in the world have been partly or entirely sold to conventional financial investors.  This Illustrates that space assets and technologies have become critical elements of the infrastructure that supports all major international security, entertainment and economic activities, which are key evaluation requirements for global private investors. These transactions have taken place despite the background noise of overcapacity, stagnant growth and declining operating margins satellite services sector.  Over the last eighteen months, we have seen a total of approximately US 12B dollars in private equity transactions in the satellite sector.  This can be compared to the reported estimate of US 140B dollars of aggregate private investment buyout transactions in 2004 across all sectors. 

Finally, the recent purchases by private equity firms of several large commercial satellite operators has been highly documented, but these investment focus mainly on Earth orbits, however is there a potential for private investment beyond these orbits?  The private equity industry is often cited as an initial source of funds for many visionary business and scientific projects.  But what is really new and interesting, is the enthusiasm of new entrepreneurs, who made significant fortunes during the dotcom era (Elon Musk: Space X, Jeff Bezos: Blue Origin, Paul Allen: SpaceShipOne etc.) or other wealthy individuals (Robert Bigelow) have to invest in the space sector.  Is this an overall trend or just some isolated cases? Passion is not everything for these experienced businessmen; they also seek a return on their investment. President Bush’s “Vision for U.S. Space Exploration” is planning to rely extensively on the private sector and therefore should open some new investment opportunities in this multi-decades plan.

This paper seeks to provide some insights into the nature, timing and a rationale for these investments in the space sector. Then, an attempt is made to analyze the potential that space exploration might present for traditional financial investors.

Abstract document

IAC-05-E3.3.01.pdf

Manuscript document

IAC-05-E3.3.01.pdf (🔒 authorized access only).

To get the manuscript, please contact IAF Secretariat.