The combined company will become the first publicly traded spaceflight company when the deal closes by the end of the year, Virgin and Social Capital said.
Credit Suisse advised Social Capital Hedosophia, while M Klein and Co, LionTree Advisors and Perella Weinberg Partners advised Virgin.
It said the final tests flights would be completed from New Mexico ahead of the launch of full commercial service for passengers and research payload.
SCH will invest around $800 million, the Wall Street Journal reported. Well, you should soon be able to buy shares in one, if Richard Branson succeeds in getting his Virgin Galactic IPO off the launchpad.
Virgin Galactic was founded in 2004, two years later than SpaceX, and became the first company that focused on space tourism and the launch of small satellites into orbit.
"Great progress in our test flight programme means that we are on track for our handsome spaceship to begin commercial service", Branson said in today's statement.
Virgin Galactic's path to profitability isn't as long as many would assume, Palihapitiya said, as the company is projected to become profitable on an annual basis by August 2021 with commercial operations starting in less than a year. "I am delighted that SCH has made a decision to become such an important part of our wonderful journey".
"By embarking on this new chapter, at this advanced point in Virgin Galactic's development, we can open space to more investors and in doing so, open space to thousands of new astronauts", Branson said in a statement. The entrepreneur suspended talks on a US$1 billion injection from Saudi Arabia last October following the murder of journalist Jamal Khashoggi.
Virgin Galactic said it has reservations from some 600 people in 60 countries, with $80 million in deposits and $120 million in potential revenue.
Branson is in a race with fellow billionaires Jeff Bezos and Elon Musk to get a private foothold in space, although both the Amazon boss and the Tesla founder have broader ambitions than space tourism.