Apax Partners France has made its third exit from the technology sector in the last two months, selling satellite business Vizada for $960 million to aerospace group EADS.
The deal follows the sale last month of Apax’s stake in French telecommunications group Outremer Telecom to AXA Private Equity in June. Earlier that month, it sold cloud computing company Prosodie to IT services group Capgemini for €382 million.
Apax France created Vizada by combining FTMSC, a division of France Telecom it acquired for €60m in 2006, and TSS, a subsidiary of Norwegian telecoms business Telenor that it bought for $400m in 2007.
Although Apax France declined to comment on its return, the exit is understood to have generated a return of more than 4x, with an internal rate of return of more than 40 percent.
Vizada provides mobile satellite connectivity services; it helps (for instance) ships and aeroplanes connect to satellites. It has around 200,000 end users, with the US government being one of its biggest clients, and operates across five continents. It expects to make around $660m in revenue in 2011, which is more than three times as much as FTMSC was making when Apax bought it in 2006.
Bertrand Pivin, the Apax partner in charge of the deal, said this was due to a “combination of organic growth, transforming build-ups and continuous operational improvements in an attractive sector undergoing major technology shifts”.
Pivin told Private Equity International that combining the two carve-outs allowed Apax France to identify a number of optimisations. As well as reorganising the way the business was run, there has also been a greater focus on mobile broadband connectivity, as opposed to narrow-band. The former, which requires large dishes mounted on a tracking device that continuously adjusts to make sure the dish is pointing at the satellite correctly, is a faster-growing and higher-margin segment of the market. Although it still accounts for less than half of Vizada's revenues, Pivin expects this to change soon.
He suggested future growth might come from commercial deals: for instance, although the company is a world leader in maritime satellite communications, only about 8,000 of the 70,000 commercial ships worldwide currently have this equipment, Pivin said.