Seraphim Space (SSIT) has crystallised a gain on its stake in ALL.SPACE, albeit a bit less less than it first expected from the sale of the UK satellite communications company that was previously its second biggest holding.

Under the terms of the $355m cash and equity acquisition of ALL.SPACE agreed by US defence group York Space Systems in April, SSIT received over 1.24m shares in the US acquirer plus £13.4m ($17.9m) cash with a further £6.1m ($8.1m) due from escrow accounts.

The deal was initially in line with SSIT’s £57.4m valuation of its stake at 31 March with York issuing shares at $34 to fund the deal.

However, the New York-listed shares fell to $22.92 at 7 July. SSIT says this is the primary reason that the consideration has fallen. There will be an initial payment of £34.7m ($46.3m), although this could rise to £40.7m ($54.4m) once all the money held back is released.

This compares to the total £31m invested by SSIT in ALL.SPACE since it first backed the British company in 2021.

The York shares acquired by SSIT are subject to a lock-up agreement allowing it to sell half after six months from completion, and the remainder three months later.

SSIT, which last month joined the FTSE 250 after a £137m fund raise in May and a surge in its share price in the previous year, is hopeful this will be a temporary setback in York’s share price.

“Were York’s share price to recover to $34 per share by the time these lock-ups expire, the total consideration (inclusive of escrow funds and hold backs) would increase to approximately $68.1m (£50.9m),” it said.

James Bruegger, chief investment officer of Seraphim Space Manager, said: “Resilient communications are the bedrock of any modern military’s ability to operate effectively. The combination of York’s and ALL.SPACE’s ground and space-based solutions represents an unrivalled and compelling capability set for assured communications. We are excited to see what impact this will have on the burgeoning global defence market.”

SSIT shares have rocketed over 139% in the past year and more than 657% in the past three years driven by the strong performance of its biggest holding in Finnish satellite operator ICEYE and burgeoning hopes of a sector underpinned by rising government and corporate demand. The shares have pulled back from a high of 273p on 22 May to 187p, down 4.2p or 2.2% today.

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