France’s CLS Is Flush with Cash and Looking for U.S. Growth after Investor Takes Big Stake

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PARIS — Private-equity group Ardian has purchased a 30 percent stake in satellite-based environmental data collection and positioning service provider CLS of France in a transaction that gives CLS the cash needed to pursue internal and acquisition-fueled growth, CLS Managing Director Christophe Vassal said.

Ardian, the former Axa Private Equity, purchased its CLS shares from a group of French banks and is apparently not seeking a path to near-term control of the Toulouse, France-based company.

A shareholder pact guarantees that the French space agency, CNES, and France’s oceanography institute, Ifremer, will retain their controlling shares for at least five years from the date of the transaction, Vassal and CNES said.

In a Nov. 14 interview, Vassal said CLS expects to benefit from the Ardian investment by pursuing business growth especially in the United States, which today accounts for no more than about 5 percent of CLS’s annual revenue.

“We see a lot of growth potential there, both in terms of organic growth and through acquisitions,” Vassal said.

CLS operates 80 instruments on board 40 satellites for environmental monitoring and tracking, notably for its global Argos network of thousands of buoys, and transmitters placed on wildlife, that relay data through satellites.

The company is a regular user of optical and radar satellite data for environmental purposes, and has expanded to providing turnkey oceanography centers that rely on satellite data for maritime monitoring.

The company, which reported 50 million euros in revenue in 2009 and 79 million euros in 2012, expects to generate more than 90 million euros in 2013 and 160 million euros by 2018, Vassal said. He said about 50 percent of the recent growth has been organic, with the rest resulting from purchases of companies doing similar work.

CNES Chief Financial Officer Laurent Germain, who is chairman of CLS, said the space agency “is very pleased with this long-term partnership, which will allow the company to accelerate its continuing development. Ardian will help the CLS Group implement its ambitious development plan. … We predict that CLS could reach approximately 700 employees [by 2018], a sizable increase on the 500 it has today.”

Baudouin d’Herouville, managing director of Ardian’s small-market enterprise capital division, said in a Nov. 5 statement that Ardian identified CLS as an investment opportunity “several months ago. … CLS is a global market leader with excellent growth potential.” He said Ardian will use its resources “to support CLS in its ambitious development plans, especially with respect to acquisitions, and notably in North America.”

Vassal said having the French government as majority shareholder, and being able to use the technical expertise of CNES and Ifremer, is an advantage, and that the government has not acted as a brake on the company’s fast growth.

CNES has long maintained equity positions in companies long after they have reached a size and profitability that, in another nation, might inevitably lead to a spin-off or sale to industrial shareholders. CNES is still the largest shareholder in the Arianespace launch consortium, for example. But CNES has also demonstrated its ability to let go of mature businesses by selling them off to existing shareholders. This has been the case with Intespace, the satellite-test-facility operator; and with satellite-imagery services provider Spot Image, both of Toulouse.

CLS appears to be growing faster than its European competitors, including e-Geos of Italy and Astrium Services of France, Germany and Britain, who are also occasional partners in the provision of satellite data, and is now about equal to e-Geos in terms of revenue. E-Geos is 20 percent owned by the Italian Space Agency and 80 percent by Telespazio of Rome.

In addition to providing services based on optical and SAR satellite radar, CLS is also making a business selling radar altimetry data. “We are just about alone in this segment,” Vassal said.

 

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