Exclusive: Boeing to spin off venture capital arm


Aug 5 - Boeing Co said on Thursday it will spin off its venture capital arm, HorizonX, to forge a broader external investment fund in a deal said by sources to value the unit at several hundred million dollars.

Under the deal, AE Industrial Partners, a specialist private equity firm will add fresh capital to the portfolio that is born of Boeing's decision to set up its own venture fund in 2017?

The partnership with Boeing and its future partners broadens our investor base, enables HorizonX to invest at a rapid pace and gives Boeing access to more outside innovations than ever, Boeing Chief Strategy Officer Marc Allen said in a statement.

The move accelerates efforts by Boeing to deepen the pipeline of technologies available for the U.S. aerospace giant and will ease the burden of supporting future growth of HorizonX, which has invested in more than a dozen companies."

HorizonX needs to go faster and needs a bigger capital pile to invest in more companies, a person familiar with the deal said.

Boeing will remain a significant shareholder with a major majority stake in the initial funding to be created from the spinoff, which is expected to be named AE HorizonX, said the person.

It will continue to hold smaller stakes in any follow-on funds bringing stronger capital.

Under the agreement, Boeing will contribute the HorizonX portfolio, valued by industry sources at several hundred million dollars. It will also provide a specialist perspective and receive preferential access to innovations developed by portfolio companies.

Boeing is among several aerospace types that have sought to hold complete control of efforts to develop technology through in-house venture funds.

But analysts have questioned the ability of traditional aerospace firms to generate significant advances in technologies like robotics and mobility.

An industry source asked the main question, how do you deal with scale?

Boeing additionally faces pressure on its balance sheet from some $60 billion in debt that became compounded with the paralyzing safety ban of its 737 MAX after two years of operations.

AE Industrial Partners, founded in Boca Raton, Florida, manages more than $3 billion in equity capital with a focus on aerospace and defense, according to its website.

Boeing HorizonX launched HorizonX in 2017 as an innovation cell focused on accelerating potentially transformative aerospace technologies and at one time said its investments would amount to tens of millions of dollars per year.

Among HorizonX's investments was a $20 million stake in Virgin Galactic's suborbital tourism venture the Richard Branson billionaire would have floated to the edge of space. http://www.reuters.com-life science vice-american for virgin galactic - branson-ready - space launch - aboard-rocket plane - 2021 - 07-11 last month.

Auch Boeing invested in the nun-defunct hybrid electric planemaker Zunum Aero.

Some industry officials expect more joint ventures and partnership as aerospace companies tackle challenges such as the decarbonization of aviation and a digital revolution in manufacturing.