Germany-based satcoms provider Signalhorn is closing in on a handful of potential M&A deals after receiving a €20m (US$25.2m) injection from private equity firm Metric Capital.
“We have three-four companies that we’re looking at right now,” CEO…
Germany-based satcoms provider Signalhorn is closing in on a handful of potential M&A deals after receiving a €20m (US$25.2m) injection from private equity firm Metric Capital.
“We have three-four companies that we’re looking at right now,” CEO Robert Kubbernus told SatelliteFinance in an interview.
“We have visibility into a couple more that are coming to the market by the beginning of next year.”
The company is keen to expand out of its bases in Germany and Switzerland into new markets, with Africa’s emerging market potential high on the list.
“We’ve got reasonable coverage in Africa, but we want to do far more there, along with the Middle East and Eastern Europe,” said Kubbernus, a serial entrepreneur who bought Signalhorn’s assets from General Electric in February 2012.
Signalhorn embarked upon a transformation soon after that deal, cutting network and staffing costs, and reorganising supplier contracts.
The capital from Metric, which came mostly in the form of debt, was partly used to recapitalise small existing loans that were expiring with full and final payouts next February.
A chunk of the proceeds is also being used to bolster Signalhorn’s balance sheet to help it bid for future projects, and another portion will go towards tripling the size of its commercial department on a global basis over the next 12-18 months.
Metric took a “small minority equity position” in the group and two members of its team are joining Signalhorn’s board as part of the deal, bringing it up to six in total. Its investment is understood to have valued the company at around €100m (US$126m).
The hunt for M&A
Kubbernus said the European firm’s expertise will help the group hunt for M&A opportunities as it looks beyond just other VSAT companies, such as Mobile Virtual Network Operators.
“We’re also looking for adjacent, synergistic businesses too, which can add to our portfolio of solutions, and have a customer base that could benefit from our existing solutions as well,” he said.
“If it was just a wireless company with some really great customers in a geographic area that we’re interested in then that will be a nice target as well. It doesn’t always have to be satellite.”
The potential deals on its radar at the moment are within the US$15m-US$30m revenue range.
As for Signalhorn, it is targeting US$45m-US$50m in sales this year, while in 2015 it expects to make more than US$60m thanks to its commercial department push.
The group’s cost cutting meanwhile has seen gross margins move from 35% when GE owned it to around 58%.
“We are now over 10% in EBITDA and have plans to increase that further,” said Kubbernus.
Offering the whole package
Signalhorn is pinning its future in the satcoms market on its ability to offer a broad package of services with a hybrid network, whether it is wireless or wireline, meaning it does not have to rely wholly on satellites for growth.
“It’s not like the 90s,” he warned.
“I’m still bullish on the satellite market but, if you want to hit double digit growth, you better have something else in your portfolio other than satellite. We’re doing far more professional services now. We have other products and solutions in our portfolio, other than just satellite, for instance security services, etc.
“Our spend on satellite hasn’t gone down, but our revenue grows because of those other products.”
Signalhorn and Metric were financially advised on their deal by Houlihan Lokey and Trinity Advisers respectively.
King & Wood Mallesons SJ Berwin provided legal advice to Metric, while Russell Cooke advised Signalhorn on legal matters.
