By Prakhar Srivastava and Pragyan Kalita Sept 14 ( ) - Early-stage defense and space companies are increasingly seeking to go public through backdoor listings this year, drawn by the appeal of flexible capital and a faster route to market at a time of surging investor interest in the industry. Unlike traditional initial public offerings, these listings involve mergers with special purpose acquisition companies, or SPACs — shell firms that raise money through an IPO and then merge with a private company to take it public. SPAC mergers allow companies to negotiate valuations privately and secure financing before going public, giving them more certainty over fundraising and reducing their reliance on favorable market conditions.
Many smaller defense and space companies, which typically rely on government contracts with unpredictable development cycles, find SPACs to be an easier route to public markets, experts say. "A SPAC merger can offer a more flexible route for companies with government contracts, strategic backing, or a clear growth pipeline, but not yet the revenue scale, margin, or predictability," said IPOX Vice President Kat Liu. A wave of blockbuster IPOs is also creating an opportunity for SPACs as smaller companies seek to go public without competing for investor attention with mega-deals.
U.S. defense firm Ursa Major, which develops propulsion systems for missiles and rockets, agreed to a $2.3-billion SPAC deal last month. Ursa Major CEO Chris Spagnoletti told that customer demand was outpacing industry supply and the SPAC transaction would provide capital to close that gap. "A traditional IPO would have meant taking our timing from the market rather than from our customers, and we didn't want the schedule set by whatever next year's window looks like for defense," Spagnoletti said.
"Public market capital lets us expand domestic production at the moment customers are asking for more capacity, more speed and better pricing." Six defense and space or satellite-related companies have announced SPAC mergers so far this year, accounting for about 10% of all deals, up from three in all of 2025, according to SPACInsider data. Besides the SPAC mergers, at least seven other defense and space companies have gone public through IPOs so far in 2026, according to LSEG data, an indication that issuers are looking to capture the booming window as well. Space has emerged as a leading pick, driven by rising government and commercial spending on satellite networks and communications, with the listing of Elon Musk's SpaceX adding to investor interest in the sector.
Earlier this month, reported that hypersonic flight company Stratolaunch was preparing for an IPO. Strong investor demand in the sector is also evident in the private market. Sierra Space's valuation has surged more than 50% in three years to $8 billion in its March funding round.
National security has also taken center stage as the Trump administration seeks to strengthen U.S. defenses and replenish stockpiles depleted by arms shipments to allies and munitions used in the Iran conflict. President Donald Trump has proposed a sharp increase in 2027 U.S. defense spending, with the national defense budget totaling about $1.5 trillion, up from the enacted budget of $901 billion in 2026. The changing nature of warfare is creating opportunities for newer companies as drones play a growing role in conflicts in Ukraine and the Middle East.
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