Entering 2023, The UK’s space sector surpassed generated income of the previous year by 5.1%. At this rate, it will outpace both the global space sector in the same period and the general UK economy, according to the UK government. 

According to the Space Index report by Seraphim, the UK ranks third in global investments in a trailing twelve month period. The UK’s 39 deals and £237 million came short of the United States’ £1.6 billion invested in 165 deals and China’s £296m across 64 deals. 

The report shows a large increase in mergers and acquisitions this year. “We can see that acquisitions are no longer reserved for the deep pockets of legacy Space companies,” said Maureen Haverty, vice president of Seraphim Space. 

Haverty says new space inquirers are driving the investment market in the first half of this year. “This shows a dramatic change, as previous cycles of consolidation within the Space industry were largely a result of select Space primes acquiring significant portions of the market.”

Along with new space players, the industry also saw an increase in private equity activity, which were responsible for some of the largest transactions this year.  

“Private Equity entering the space sector indicates that there are plenty of businesses in the sector that are currently undervalued and can be acquired for an attractive price, made more profitable, and generate more revenue to be sold at a much higher price in the medium term,” said Haverty.  “They clearly see the potential for further consolidation and are likely to drive some of this themselves.”

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The UK’s space sector attracts a diverse range of investors, 89% of which came from the private sector. Acquisitions made up three quarters of the total investment value. This sector translates into an estimated 48,800 jobs, along with another 126,800 to support the wider supply chain. 

“These positive figures underline the opportunities that space offers to drive inspiration, aspiration and productive jobs across the UK,” said John Hanley, chair of the UKspace trade body. “We must further strengthen our partnerships to maintain growth across the whole of the sector, allowing us to extend our reach and support the UK space industry in cementing its position as a leading player in the global space arena.”

According to Seraphim, the next half of this year will likely bring large valuation resets in growing companies. In particular, massive growth is already materialising in the space data industry.