Saudi Arabia's Public Investment Fund is planning to invest about US$1 billion in Virgin Galactic, The Spaceship Company and Virgin Orbit.
The non-binding memorandum of understanding includes an option for US$480 million of future additional investment in space services, the statement carried by the official Saudi Press Agency said on Thursday.
"This investment will enable us to develop the next generation of satellite launches and accelerate our programme for point to point supersonic space travel," Virgin Group founder Sir Richard Branson said.
Earlier Sir Richard said he has accepted a board position on large development projects in Saudi Arabia.
"I will invest. I've been asked to be... on the board of one or two of your city projects - your Red Sea Project - and am delighted to accept," he told an investment conference in the capital Riyadh on Thursday.
Saudi Arabia announced on Tuesday a US$500 billion cross-border city development project on the Red Sea. The kingdom also plans tourism developments on a number of Red Sea islands.