• Globally, the satellite industry is attractive

    • Large market (US$189b) with moderately strong historical growth at 9% CAGR

    • Satellites are considered privileged assets, and average industry profitability is moderately high at 8% (2012), having risen from 5% (2010)

 

  • Within the industry, Satellite Operation and Satellite Service Provision (Broadband & TV) are the most attractive segments, while further research is required to uncover targets in Ground Equipment Manufacturing

    • Satellite Operation enjoys the highest profitability at 22%, and wields the greatest power across value chain as the players own and operate the assets and infrastructure in space

    • Service Provision is the largest (US$95b), and enjoys significant growth at 10% historical CAGR

    • Value creation opportunities exist through consolidation in all segments and revenue expansion by targeting blue-chip industries such as Maritime and Oil & Gas for the Satellite Broadband segment

 

  • In Asia, Indonesia and Malaysia are the most promising markets to consider

    • Indonesia’s Satellite TV market is poised for strong future growth, driven by macroeconomic (i.e. rising middle class), market factors (i.e. lowest penetration in Asia, concentrated market) and geography (i.e. vast land expanse).

    • In Malaysia and Indonesia, Satellite Broadband is an attractive buyout segment poised for strong future growth driven by growth in the rural broadband and Oil & Gas sectors

 

  • The identified four potential targets have strong competitive positions in their respective markets

    • These companies are market share leaders or strong followers

    • They have strong growth potential through new market opportunities, government initiatives and macro enablers

    • Operationally, companies appear solid with strong management in place

 

There have been few private equity deals in Asia, and this represents an opportunity for us to take the lead in a copycat deal in Asia. Based on a global analysis of private equity and M&A transactions, several themes emerge

  • Across all identified attractive segments, significant degree of consolidation is taking place, with large strategic buyers acquiring smaller players to expand geographically or strengthen existing market position

  • Private equity activity has been mainly concentrated in Western countries and returns have been quite significant, with private equity firms such as Permira achieving returns as high as 9.0x

  • Asia, on the other hand, has seen lower deal activity. Permira stole the march by leading Asia’s first satellite by acquiring Asia Broadcast Satellite in a deal worth US$200m. However, there has not been a successful private equity exit in Asia

  • Recommended exit options (in order of priority) are:

    • Trade sale to strategic buyers looking to strengthen existing market positions, or to expand geographically

    • IPO

    • Secondary sale to private equity funds (i.e. TA Associates) looking to consolidate in Asia

Buyouts in Space: Satellite Hunt

Acquisition Research

Uncovering Buyout Opportunities in the Asian water industry

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