Corporate Finance soundbite: Mergerspresso

Lucy:

So, is space the final business frontier? Welcome to Mergerspresso!  

As NASA prepares to take humans around the moon and there’s talk of a multi-trillion dollar SpaceX IPO, we're talking about the business of space. With me, Lucy Robson, are Alex Hogarth, who heads up AG's aerospace and defence sector, plus Brian Macreadie, AG's very own astrophysicist and marketing guru. So Brian, how has the approach to space exploration evolved? 

Brian:

Well, it's been a good few years since I studied and practiced physics, but I'm over the moon to be here (pardon the pun!) thanks Lucy. But back to your question, we’ve all known for a long time, space exploration was really only for governments. But in the last few decades, that's really started to shift. Low Earth Orbit, which is basically the zone up to about 2000 kilometers above the Earth, has quietly become prime real estate for satellites, for Earth observation, for telecoms, for microgravity. There really is a lot of tech and a lot of assets up there these days.  

Lucy:

There really are – you even hear all about instantaneous launch windows. But Alex, that shift really seems to have unleashed commercial interest in space and satellites.  

Alex:

That's right. It really is amazing how quickly Low Earth Orbit has shifted from government-owned into a proper commercial ecosystem. It's certainly been led from the US, but there has been a wider and rapid drive to change the economics of space more generally. The drive for commercial launch providers such as SpaceX and Boeing, reusable rockets and an ever-proliferating number of satellites, of course, means that space is becoming a supply chain with uniquely expensive and risky logistics.  

Lucy:

This is true. And then I guess there's the Moon as well. We've just seen Artemis 2 launch and that program generally is seeking to return humans to the Moon and build a sustainable presence there, Brian.  

Brian:

A lunar presence is about many things. Of course, it's about geopolitics, it's about minerals. But I truly, romantically, believe it is about inspiring the next generation, as the space shuttle once upon a time did for me. It's about discovery and it's about future possibilities.  

But when it really comes down to it, a lunar presence is also effectively infrastructure. It's lunar bases, it will be power systems, mobility, communications. Basically, it's going to be the world's most ambitious-ever construction projects and like any construction project, it's going to need contractors. That's why I think we're going to see so many more partnerships between agencies and private companies. I think the scope is just too big and too expensive for any one government alone.  

Alex:

I agree. Less of a romantic vision potentially to end on, but the commercial opportunity is huge and the engineering and scientific benefits ultimately filter back into the Earth economy, if we can call it that. Of course, we're now seeing SpaceX talking of possible AI data centers in space, but the capital costs are enormous, which is one of the reasons we're seeing talk of possible SpaceX IPO, as you mentioned at the start Lucy.  

Lucy:

And we're hearing news that those papers may be being filed at the moment.  

It is absolutely fascinating. And Brian, I really loved the space shuttle as well, I really did! But ultimately, it feels that space is moving from, “Can we go?” to “What can we build, sell and scale once we're there?” and that's bringing it into the mainstream as an emerging sector. Space doesn't seem to be the final frontier, it's actually the next market.  

Anyway, catch you next time on Mergerspresso! Give us a review on Apple, Spotify or Amazon and drop us a line if you'd like to chat.