During this summer of great concern for Planet Earth, space has become a focus for investors.
What better time to explore technologies that sound like science fiction but can solve terrestrial challenges while providing a route to portfolio diversification?
The new James Webb telescope, which gave us images of the beginning of the universe, has reminded us of the wonders of outer space, an industry in which the UK has the third largest number of start-ups in the world, after the US and China.
A giant leap: an investment journey is a journey into the unknown
Next month, Richard Branson’s Virgin Orbit will launch commercial and military satellites from Spaceport Cornwall. The rocket carrying the satellites is to be carried on the wing of a modified Boeing 747 and then released into space.
You can stargaze here – like I do – but stay objective. This is essential if you are venturing into this sector with its complexities. Goldman Sachs says the global space economy could be worth $1 trillion (£820 billion) by 2040.
Morgan Stanley’s forecast is £1.16 trillion, while Merrill Lynch is forecasting £2.5 trillion. The huge difference between these estimates underlines that an investment journey is a journey into the unknown.
But these predictions also indicate the potential benefits, and the magnitude of the potential benefit to our planet. Mark Boggett, manager of the Seraphim Space Fund trust – which supports companies operating in the latest frontier sectors – is convinced that ‘space holds the answers to humanity’s problems, such as climate change’.
However, these hopes are accompanied by growing concerns about who is in control of the wealth of data space that companies accumulate.
OneWeb, a British company, is a pioneer in LEO (lower Earth orbit) satellites used for purposes such as military reconnaissance and monitoring moisture levels in fields to promote bountiful harvests.
Despite a government bailout in 2020, it needs money to compete with Elon Musk’s SpaceX. However, a merger with Eutelsat has sparked controversy over the Chinese Investment Company’s stake in the French company.
A side effect of the OneWeb row has been the excitement surrounding Seraphim, which made its debut a year ago. When I wrote about space at the time, the shares in the trust were at a premium of 7 percent to the value of net assets. Today it is discounted by 22 percent, largely due to the decline in the shares of two publicly traded holding companies, encryption software specialist Arqit, a British company, and Spire Global, the weather forecaster.
Both merged last year with US-listed special-purpose acquisition companies. The trust also owns Altitude Angel, part of a consortium proposing to build a 165-mile drone highway linking the skies over Reading (where it is based) to Oxford, Milton Keynes, Cambridge, Coventry and Rugby. This would remove traffic from the roads.
Satellite Vu, a British company, aims to be ‘the thermometer of the Earth in space’, measuring the temperature of any structure. This should contribute to energy efficiency, reducing fuel bills and combating warming of the atmosphere. Other Seraphim companies include D-Orbit, which Boggett says is the “Kwik Fit of space,” which maintains spacecraft. Astroscale is ‘the RAC of space’ as it cleans up defunct satellite remnants
Some will view Seraphim as the investment equivalent of the Wild West. But James Carthew of Quoted Data says the trust is aimed at adventurous bargain hunters.
The opportunity for adventure draws the super-rich to outer space. Jeff Bezos, founder of Amazon, and Bill Gates, founder of Microsoft, both support aerospace companies.
Those with more modest means might consider space division companies such as US giants Lockheed Martin, Northrop Grumman or Boeing, which develop unmanned flying taxis.
European space giant Airbus prides itself on being Europe’s largest aerospace company, with a facility in Stevenage in Hertfordshire. FTSE100 defense firm BAE Systems claims to be “at the forefront of space innovation.” Scottish Mortgage Trust’s bets on space include a £430 million stake in SpaceX.
Such enterprises, while fraught with danger, are less subject to inflationary fears than more earthbound enterprises. I’m on board – for this and the thrills!
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