Nascent satellite solutions provider NovelSat is building a war chest to rapidly gain scale as part of plans to realise its IPO aspirations, according to co-chairman David Furstenberg.
NovelSat, which was founded in 2007, is currently in its first year…
Nascent satellite solutions provider NovelSat is building a war chest to rapidly gain scale as part of plans to realise its IPO aspirations, according to co-chairman David Furstenberg.
NovelSat, which was founded in 2007, is currently in its first year of commercial operation. It began recognising revenues in February 2012.
The company hopes its NS3 technology, which encompasses modulators, demodulators, modems and application-specific integrated circuits, will eventually replace the DVB-S2 as the industry standard.
In an interview with SatelliteFinance, Furstenberg said NovelSat was created with the intention of growing fast towards an IPO, but it was still some way off going public.
“I believe that an IPO is not the end of the game but the beginning of the game, and we need to go there with a long-term plan,” he explained.
“Many companies go into the IPO process without enough cash to buy other companies along the way. We will not rush into an IPO until will feel we have a sufficient war chest to buy other businesses. Our intention is to become a dominant company.”
NovelSat has so far raised more than US$20m from its private shareholders, and has received around US$4.5m in grants.
Furstenberg declined to disclose early sales figures, but added that it was experiencing rapid month-to-month growth rates.
“Having a proven superior R&D organisation, and equipped with a full generation technological advantage over all the other players in this vast and aggressively growing market, and armed with the most compelling ROI, NovelSat is convinced of its ability not only to command the new greenfield opportunities and tenders but, even more importantly, to aggressively replace the huge customer base of already deployed equipments.”
Furstenberg said the company’s first priority was to reach break even as soon as possible. After that, the decision when to launch an IPO was more of a philosophical one.
“Some experts say we need to be a US$60m company before launching an IPO. Others say we need to just have a robust year of trading – even if the figure ends up being below that threshold.”
The group hired its first CFO, Ilana Lurie, in February as its focus shifted outwards towards customers, analysts and potential investors.
When asked whether NovelSat would consider tapping the debt markets to help fund its growth, Furstenberg said it was “very possible”, but a decision had yet to be made because the company was still evaluating its growth.
“This is our first year of sales, but I don’t rule out some kind of mezzanine debt to build out this company,” he said.
Despite only coming to the market this year, Furstenberg revealed that the group had already received acquisition bids from both similar-sized companies and larger players in the industry. However, he said these offers had been rejected to allow NovelSat to concentrate on its business plan.
“I can’t say there is no offer we would not say no to, but our aim is to build the company in the long run,” he said.
