Troubled SPAC to Acquire iRocket for $400M Despite Cash Return

A Challenging Path to Public Markets

A newly established startup with limited resources is attempting to merge with a special purpose acquisition company (SPAC) possessing significantly reduced funds, aiming for a public listing valued at $400 million.

SPAC's Diminished Resources

Innovative Rocket Technologies Inc. (iRocket) is partnering with BPGC Acquisition Corp., a SPAC initially founded by former Secretary of Commerce Wilbur Ross. The intended completion of this transaction is set for the final quarter of the current year.

Notably, the SPAC has experienced a substantial depletion of its initial capital following its $345 million IPO in March 2021. A September 2024 filing with the U.S. Securities and Exchange Commission revealed that the SPAC had returned a significant portion of its funds to shareholders after failing to identify a suitable acquisition target by September 2024, retaining only $30.5 million in trust.

Further Redemptions and Extension

Just sixteen days later, an 8-K filing disclosed an additional $28.8 million in redemptions. This left the trust with a mere 0.5% of its original amount – approximately $1.6 million. The remaining shareholders, primarily the SPAC’s sponsors, subsequently agreed to extend the deadline for finding an acquisition target to March 2026.

iRocket's Background

iRocket initially garnered attention due to backing from venture capital firm Village Global, whose limited partners include prominent billionaires such as Bill Gates, Eric Schmidt, and Reid Hoffman.

Despite this early support, iRocket represents a somewhat unexpected candidate for a take-public transaction. The company has secured only a few million dollars in venture funding, a relatively small amount within the highly capital-intensive aerospace industry.

Limited Flight History and Competition

Since its establishment in 2018, iRocket has not yet conducted a single test flight of its Shockwave launch vehicle. During this period, other companies, including Stoke Space and Firefly, have progressed further in hardware development and secured greater financial resources.

The competitive landscape has also evolved. As of 2023, iRocket positioned Shockwave as capable of delivering payloads between 300 kg and 1,500 kg. However, this payload capacity overlaps with existing vehicles like Firefly’s Alpha and Rocket Lab’s Electron, both of which have successfully carried customer payloads.

To become truly competitive, iRocket must demonstrate the viability of its core value proposition – encompassing full reusability, rapid refurbishment, and 24-hour responsiveness – a challenging set of objectives.

Small Team and Existing Contracts

According to LinkedIn, the New York-based startup currently lists only four employees, excluding board members. Its existing contracts include an $18 million agreement with the Air Force Research Lab and a $1.8 million contract with the Space Force.

A public relations firm representing both iRocket and the SPAC declined to address inquiries from TechCrunch.

SPAC's Troubled History

The SPAC has a history of unsuccessful attempts at going public. Previously operating as Ross Acquisition Corp II, it sought to merge with biopharma company Aprinoia Therapeutics in January 2023, but the deal was terminated eight months later.

Following the failure to complete a transaction, the New York Stock Exchange initiated delisting proceedings against the SPAC in March of the previous year.

Ross Acquisition Corp II subsequently rebranded as BPGC Acquisition Corp. and now has until March 2026 to finalize a deal.

Need for Additional Funding

Considering the SPAC’s limited cash reserves, if iRocket’s current shareholders anticipate receiving substantial cash for their equity, the two entities will likely need to secure a significant investment from private equity investors through a PIPE (private investment in public equity) transaction.