July 28 (Bloomberg) -- U.K. billionaire Richard Branson’s Virgin Galactic Ltd. commercial space venture sold a 32 percent stake to an Abu Dhabi investor, raising $280 million to help fund a test-flight program that will begin later this year.

The purchase by Aabar Investments PJSC values Virgin Galactic’s business at $900 million, the Abu Dhabi government- controlled group said in a statement today.

Virgin’s prototype SpaceShipOne flew to the edge of space three times in 2004 and the successor SpaceShipTwo should begin testing this year, the statement said. Both craft use a carrier plane, WhiteKnightTwo, to travel to high altitude, from where they are launched. More than 300 people have paid almost $40 million in ticket deposits, according to London-based Virgin.

“This is very impressive technology, and there is a growing feeling, especially in the U.S., that the way forward in space may lie outside the institutional agencies,” said Professor George Fraser, director of the Space Research Centre at Leicester University, England. “But Virgin is talking about sub-orbital flights, so you go up and come back down pretty soon after, which is very different from the ultimate goal of going up and staying up using a single-stage reusable rocket.”

The Abu Dhabi investment will help complete the building of the Virgin Galactic spacecraft and finance the testing of the system, Virgin spokesman Nick Fox said in an e-mail.

“The initiative will leverage the solid financial backing of Aabar and the pioneering technology and strong global relationships of Virgin Galactic,” Branson said.

Space Pioneers

The entrepreneur, who also owns Virgin Atlantic Airways Ltd. and Virgin Trains, has spent $100 million on the rocket unit since its foundation in 2004 and is one of a number of wealthy individuals investing in space after success elsewhere.

Hawthorne, California-based SpaceX, the brainchild of PayPal Inc. founder and Tesla Motors Inc. Chairman Elon Musk, successfully launched its Falcon 1 rocket in September after three failed attempts, while Las Vegas hotelier Robert Bigelow has spent more than $500 million of his own money developing inflatable modules that can be deployed in space.

Branson today agreed to sell his 28 percent stake in Virgin Mobile USA Inc. to Sprint Nextel Corp., the third- largest U.S. phone company, which is buying shares of the company it doesn’t yet own for about $420 million.

Launch Capability

Aabar has also committed $100 million to fund a satellite launch capability and plans to build a spaceport in Abu Dhabi, the statement said. The deal, signed at the Experimental Aircraft Association’s AirVenture air show in Oshkosh, Wisconsin, will guarantee the emirate exclusive regional rights to host tourist and scientific flights.

The stake “will open a new avenue of opportunity for Abu Dhabi,” Aabar Chairman Khadem Al Qubaisi said in the statement.

Aabar, whose largest shareholder is the Abu Dhabi government-owned International Petroleum Investment Co., in March bought a 9.1 percent stake in Daimler AG, the second- largest maker of luxury cars. Earlier this month, it and Austria’s Berndorf AG announced a joint venture to invest in technology and real-estate holding companies in Europe.

To contact the reporters on this story: Steven Rothwell in London at srothwell@bloomberg.net; Arif Sharif in Dubai at asharif2@bloomberg.net.

Last Updated: July 28, 2009 15:22 EDT