Investors interested in exploring the final frontier have become more enthusiastic and cautious about European space-tech deals lately. “The hype is colliding with reality,” said David Ford, a partner at Silver Peak, a London-based consulting firm that is active in space-tech deals.
Ford said dealmakers have been shifting focus recently. Delivery-focused industrial businesses remain attractive targets, he said, with interest particularly in subsectors such as satellites with intellectual property (IP) and subcomponents such as solar panels, avionics and computers.
Meanwhile, low-earth orbit – objects orbiting at an altitude less than about a third of the Earth’s radius – is already becoming industrialized, said Christian Schmiller, co-CEO of German space technology company High Impulse.
According to Mergermarket data, there has been a surge in large deals in Europe in recent years in the space tech and satellite-related sector, but that trend is slowing.
The peak was in 2021, with 28 deals initiated with a total disclosed deal value of €8.6 billion. Since then, deal value has declined to 21 deals worth €2.3 billion in 2022 and 23 deals worth just €727 million in 2023. As of April 11 this year, there have been only four significant deals, a significant drop compared to 10 in the same period in 2023 and 13 in 2022.
Space investment goes through cycles, partly driven by the visibility of divestments, Ford said. The first divestment cycle happened around 2016, he said. “Nothing happened for a few years after that, so investment levels started to drop.”
Recent transactions in this sector include a funding round by Unseenlabs, a French company developing satellite radio frequency geolocation solutions for maritime surveillance and aerospace, which raised €85 million from investors including Supernova Invest, ISALT and UNEXO.
Meanwhile, Poland- and Finland-based satellite information services provider ICEYE raised a massive $93 million funding round, bringing its total raised to date to $438 million.
Grzegorz Wrona, CEO of Polish satellite systems maker Creotec Instruments, said space technology takes years to develop and not all companies can deliver on their promises, which is causing investors to become more cautious and focus on more mature investments. [WSE:CRI]The company hopes to raise more than 60 million zlotys (around 14 million euros) by the end of 2023 and plans to launch the Eagle Eye satellite from the United States later this year.
It will take five to 10 years for satellite and rocket companies to become profitable, said Christian Schmirler of High Impulse, which is launching its rocket from Australia today (May 2).
Ford said European governments were key stakeholders in the development of the sector: “Since Russia’s invasion of Ukraine, we’ve seen a lot of companies signing commercial contracts with the military. We’ve also seen a lot of state activity, with a lot of countries looking to have their own satellites for communications and Earth observation. And because of the geopolitical situation, they want to have their own assets.”
Schmirler said European countries needed a space strategy: “Everything industrial activity today requires data from space to be possible,” he said, adding that the Internet of Things, communications, mobile telecommunications and Earth observation were all areas of strategic importance.
Although M&A is currently declining, support from European institutional investors should ensure that the long-term trend continues over the next few years.
Unique Intelligence
HyImpulse (April 25th)
German space technology company High Impulse Technologies plans to close a 30 million euro fundraising in September and is already in talks for a follow-on 50 million euro round to be completed around mid-2025, co-founder Christian Schmiller said. The company has received undisclosed commitments from some investors in the ongoing round and is seeking a lead investor, Schmiller said. Munich-based Pulsar Consulting Group is acting as an adviser, he added.
Loft Orbital (April 3)
Loft Orbital, a France- and U.S.-based provider of turnkey space technology, plans to raise capital for an eventual IPO in 2024, said CEO and co-founder Pierre-Damien Vaujours. The company aims to raise at least an amount in its next round that matches the $140 million it raised in its Series B round in 2021 to fund its next stage of development, Vaujours said.
CloudFerro (March 15)
Poland-based cloud services company CloudFerro is actively researching the market for potential acquisitions, CEO Maciej Krzyzanowski said. The company is already in talks with potential buyers, Krzyzanowski added. The company could make several acquisitions within the next two years and is looking at targets that could generate hundreds of thousands to millions of euros in EBITDA, he added. CloudFerro has ambitions to become a leader in cloud computing and satellite Earth observation in Europe.
Sateriot (March 1st)
Sateliot, the Barcelona-based satellite communications operator that offers Internet of Things (IoT) connectivity, remains focused on an IPO in 2026 or 2027, CEO and co-founder Jaume Sampera said on the sidelines of Mobile World Congress (MWC). Sampera had begun discussions with advisers about a possible IPO, scheduled for 2026, he told Mergermarket at MWC last year. But despite the end goal being clear, the company hasn’t made any strategic decisions on this front yet, he said in a recent interview.
Greener Wave (February 1st)
GreenerWave, a France-based developer of electromagnetic wave control technology, is looking to enter the U.S. market through acquisition and will consider appointing a U.S.-based advisor in early 2025, said founder and CEO Geoffroy Lerossé. The Paris-based company plans to expand in the U.S. market from 2025 and will consider acquisitions to gain customers and penetrate the defense market, which requires a U.S. base, Lerossé said.
