By Chris Forrester
Silicon Valley Space Week brought together acknowledged experts in the M&A field and very much focused on space-related activity. Alexis Sáinz, Partner, Hogan Lovells, moderated the session which included solid advice from investment bankers, advisors and valuers and ranging from small start-ups to extremely larger industry players. “We are in a wave of massive industry consolidation, with SES and Intelsat, Viasat and Inmarsat and others,” she said.
Karl Schmidt, MD, KippsDeSanto said that the markets were good at the moment and that trades were taking place at a rate of around 250 aerospace deals last year but 2024 is quieter and not helped by the upcoming election. The coming together of SES and Intelsat presents difficulties for their suppliers. Inevitably there will be changes and for those currently supplying the two giants life could get difficult. On the more positive side hopefully there will be a healthier company which will be good.
Armand Musey, Founder & President, Summit Ridge Grp said that the IPO market was not strong today although that creates opportunities from the Private Equity players. The overwhelming influence is the role of SpaceX and Starlink which has dramatically affected the industry and in particular the FSS sector and launch providers and their related suppliers. This, when you have such a huge player, directly affects the debt and equity markets. Earth Observation is not affected by this so that segment is doing better, but others are nervous and the SES and Intelsat deal could be considered as ‘defensive’.
Musey addressed the SES/Intelsat transaction, saying that most of the FSS operators have been trading at below book value and despite including the cash they received from the C-band sale of spectrum. “This is a sign that the FSS sector is not doing well. There has been customer defections and pricing pressure because of Starlink. Their Video clients are increasingly shifting to fiber so they are being squeezed from both sides. The ripple effect from these struggles affects everyone downstream is enormous. He added that SES’s trend to adopt more vertical integration could now be on hold pending the regulators examination of the deal.
Francois Chopard, CEO, Starburst, explained that in 2021 and 2022 and in late-stage start-ups activity rose to $15-$20 billion, but since then has decreased. “We have seen SPAC activity and some private round with about 20 new companies with initial valuations of more than $1 billion, but public cash from NASA and ESA cash has increased. We have also seen activity from the Middle East with the creation of new Space Agencies, and also in Thailand and south-East Asia. One of the other consequences of the SES/Intelsat deal affects Europe’s two satellite manufacturers, Airbus and Thales-Alenia. There’s talk of them merging their space activity and at the very least restructure and this affects their own supplier chains.”