Elliott Invests in Hypersonic-Flight Company Stratolaunch
Activist hedge fund also getting board representation at Cerberus-backed company
Elliott Investment Management has made an investment in Stratolaunch, a privately held hypersonic-flight company, according to people familiar with the matter.
The details
Elliott will also gain board representation at Stratolaunch, the people said. Elliott’s investment is worth several hundred million dollars; the exact size couldn’t be learned.
The Mojave, Calif.-based company is owned by private-equity firm Cerberus Capital Management. Cerberus bought Stratolaunch in late 2019 after its founder, the late Microsoft co-founder Paul Allen, died in 2018. It pivoted the business from space launches to hypersonic-flight testing for defense.
Cerberus’s former co-chief executive, Stephen Feinberg, left the firm last year to become the Trump administration’s deputy secretary of defense.
The context
Stratolaunch makes reusable hypersonic test aircraft, which are integral for the Defense Department’s lower-cost tests of aircraft and weapons that travel at least five times the speed of sound.
In March, the U.S. military completed a series of test flights of a reusable hypersonic rocket-powered aircraft for the first time in more than a half-century. It used Stratolaunch’s Talon-A aircraft, which operates autonomously.
Elliott, best-known for its work as an activist hedge fund, is a notable addition to the private-capital rush into startups building hypersonic-speed aircraft and components. The companies are racing to build out the long-range, superfast weapons.
Venture capitalists put more than $2 billion last year into U.S. startups working on hypersonics, according to PitchBook.
The U.S. has tried in fits and starts over many decades to develop hypersonic-speed weapons with minimal success. Meanwhile, China has stockpiled them and Russia used them against Ukraine as recently as this month.
Alarm over America’s deficit led a U.S. defense official to in November name hypersonics on a list of six critical technologies that would “define the future of American military superiority.”