Since I last wrote on Blue Abyss back in June last year (copies available on request) the company has made truly excellent progress. While still I suspect to be considered at the early stages of its planned development, Blue Abyss vision to build state-of-the-art facilities in the UK in order to create what they believe will be the world’s most advanced deep-sea and space extreme environment research, training and test centre. What follows is essentially an update of progress from my perspective and toward the end of this commentary, parts from the Blue Abyss EIS Investment Overview.
It was extremely pleasing for me to be made aware in recent communications I have had with Blue Abyss senior management that not only was a recent presentation of plans made by them to Prime Minister, Boris Johnson and Secretary of State for Defence, Ben Wallace at Hamworthy Barracks been very well received but also that over the past few months support for the project from those within the defence community, industry and from senior members of the Royal Air Force and Royal Navy has continued to grow.
The Blue Abyss aim is to place the UK at the forefront of global deep sea and human spaceflight training and innovation development. Put simply, the intention is to create an international network of next generation extreme environment research, test, and training centres that are designed to support vital activities such as offshore energy, subsea technology, research and development, space defence plus, in the commercial human spaceflight sector as this evolves, creating what is likely to be required in respect of extending exploration based research and training capability across new boundaries.
To that end the company is in advanced discussion with the Cornwall & Isles of Scilly LEP and the Cornwall Development Company, with regard to establishing the primary UK Blue Abyss centre at the Aerohub Enterprise Zone located within the Spaceport Cornwall site on Cornwall Airport Newquay.
As a county, Cornwall has a long and proud history of space technology that started in 1962 with the Goonhilly Earth Station (Goonhilly Down) from which place on TV I well remember as a youngster watching the first ever live trans-Atlantic pictures emerging via the Telstar satellite. For Blue Abyss the synergy with Cornwall’s existing commitment to space (Spaceport Cornwall and Goonhilly Earth Satellite Station) combined with the Floating Offshore Wind (‘FLOW’) initiative in the Celtic Sea make absolute sense and are acknowledged by all parties.
Getting to this point has not been easy and there have been obstacles to progress that required initial plans to be changed. However, every cloud has a silver lining so they say and fortuity has also played a hand – a reference to the increasing Government commitment to space led innovation, and increasing MOD and Royal Air Force activity in space development no longer being just a discussion point of intention but, since Air Vice Marshall Harvey Smyth was appointed as the Director Space MOD, this has itself already become a funded reality.
Given that Blue Abyss has the potential to create as many as 120 high value employment opportunities in order to deliver plans that include specialist education and training, the proposal of additional economic stimulus to the region and that is in line with objectives set out in the LEP’s Local Industrial Strategy has I understand already been acknowledged. It is also worth mentioning here that establishment of the Blue Abyss business and the foregoing impact that this would have in the region directly supports central government’s ‘levelling up’ agenda.
While not directly related, worth mentioning too that the recent announcement by HMG that Cornwall has been ‘chosen’ to host the G7 Leaders’ Summit in June this year has not been lost on any of the fast expanding Cornwall based space community. Blue Abyss, for example, intend to leverage the attention of those involved in discussions built around economic recovery, health, security, climate change and environment and in the process demonstrate that the company has potential expertise and knowledge that can directly contribute to progress in each of these key areas.
In the longer term I am in little doubt that apart from providing direct support through development of its plan and subsequent employment in the region that as a consequence of this Blue Abyss will indirectly or otherwise also assist Cornwall to increase the attraction of the county as being a place to locate new and exciting science and technology based businesses. On that subject I am aware that conversations between Blu Abyss and Dr Catherine Warner, head of NATO’s Centre for Maritime Research & Experimentation, have taken place and that she is very supportive of Blue Abyss plans.
That I am told by the company that both the Prime Minister and Secretary of State for Defence received plans put forward by Blue Abyss very positively provides a significant moral boost to those involved in pushing the plans forward. Perhaps the most positive aspect of change since I last wrote is that Blue Abyss plans are increasingly being acknowledged by those in government as not only being a potentially substantial contribution to realisation of aspirations that the government has in offshore energy and space sectors but also acting as a commitment to R&D enabling infrastructure – something that will also be a key element of the post-COVID economic recovery strategy.
The hope is that increasing engagement with central government will also be seen as a means of catalysing interest and support amongst the wider investment community. The company is further supplementing interest with evidence of the increasing appetite for specialist services and capabilities that it intends to offer commercial clients, public service entities, academic and applied research communities – examples of which include Imperial College’s own robotics team and the Fair-Space Hub which is I understand part of Surrey University).
Investment Opportunities? I understand that an EIS (Enterprise Investment Scheme) proposal now exists (EIS is designed to assist small companies to raise money in order to grow and offers tax reliefs to individual investors who acquire new shares in the company) to the order of a £250,000 funding requirement in tranches of £50,000. This is in order to see the company through the discussions with funders and the local Cornwall authorities ahead of finalising larger investment. For those interested I will send a link on request or put you in touch with CEO, John Vickers. As mentioned earlier, although the primary location intention has changed, my original commentary on the fascinating company which contains details of people involved, is also available on request.
What follows is some of the more pertinent information contained in the Investment Overview:
As alluded earlier, the UK government is already prioritising research and innovation infrastructure within an overall commitment to invest 2.4% of GDP in R&D by 2027. Such commitment directly supports HMG’s ambition to establish the UK as a potential world leader in clean wind energy and also to capture 10% of the global space market by 2030.
The Offshore & Subsea Energy, Defence, and Ocean Ecology sectors rely increasingly on automated and remotely operated vehicles for performance of underwater tasking. The underwater vehicle market is experiencing a CAGR of 18% and is expected to exceed $9bn in value by 2025.
There is a critical shortage of suitable test and evaluation facilities to enable operators in these markets to capitalise fully on the growth opportunity.
Commercial human spaceflight is emerging, and forecast to expand at a CAGR of 16.6%, reaching over $1.2bn by 2024. This will create a market for the provision of accredited training and preparation services for commercial operators’ crews and passengers, including space tourists, scientists, media representatives, etc.
Blue Abyss will establish the foremost collaborative, extreme environment research, test, and training facilities, including the world’s first commercial astronaut training centre.
The centre’s fully integrated, state-of-the-art facilities will enable clients to optimize their R&D, innovation, and operational procedures, to increase productivity, reduce costs, and minimise risk, utilising technology to provide exceptionally realistic simulations to enhance preparedness.
Space sector clients will benefit from bespoke pre-flight training & preparation and hi-fidelity experiential programmes.
The Blue Abyss UK centre will be located at the Aerohub Enterprise Zone, the home of Spaceport Cornwall and close to Goonhilly Earth Station, aligning fully with the county’s strategy to expand its space and offshore energy interests, including the planned floating offshore wind farm on the Celtic Sea.
Revenue is generated by means of centre rental and delivery of bespoke training and preparatory programmes.
Client organisations will book use of the centre’s facilities in accordance with their product and solutions development schedules, which are typically planned months/years in advance. Good earnings visibility therefore results. Contemporaneous use by client organisations maximises revenue.
At mature operating level the centre will secure a c. 30% market share of combined annual R&D test & evaluation expenditure of UK companies in the target sectors. At budgeted occupancy, the centre will generate revenue of £24m and EBITDA of £5m in the first full operational year. Mature centre occupancy is forecast to be achieved by the fourth operational year, generating revenue of £77m and EBITDA of £44m p.a.
Blue Abyss seeks equity investment up to £5m to complete the planning approval process for the UK Centre, to fully establish the organisation, and to expand business development which is Enterprise Investment Scheme (EIS) approved.
Positive, ongoing engagement with regional government regarding potential grant funding and other support. • The UK Centre construction and commissioning costs are c. £148m, for which a number of expressions of interest from potential funders have been received. IRR 19%. NPV (5%) £169.9m. ROI 131%. Capital investment is fully recouped by the sixth operational year.
CHW (London – 17th February 2021)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785