UK Export Finance steps up space sector focus
WASHINGTON — U.K. Export Finance’s $325 million loan to Turkey this April is the most the agency’s has ever provided for a space industry deal.
Britain’s export credit agency has long discussed more involvement in the satellite industry, but didn’t have any major deals to show for it until now.
Adam Harris, head of civil, infrastructure and energy activity at UKEF, says the agency’s ability to support not just manufacturing but also launch and launch insurance has triggered increased demand for its financial services.
The Turksat-5A and -5B satellites are under construction by Airbus Defence and Space, which is building the satellites in the U.K. and France. Airbus’ contract, worth nearly $500 million, includes a ground station, launch services and in-orbit delivery.
The U.K. finds itself at a crossroads, having established the goal of growing the nation’s industry to comprise 10 percent of the global space economy by 2030, but also battling industry fears that Brexit will cost British companies access to European Union space programs. While the U.K.’s Harwell Space Cluster has attracted companies such as Oxford Space Systems, NanoAvionics and most recently hiSky, space software company Scisys left England for Ireland to preserve business within EU programs like Galileo and Copernicus.
Whatever the challenges, Harris says UKEF is ready now more than ever to support the British space industry.
How much space sector financing does UKEF do annually? Is that amount rising or falling, and why?
UKEF support for exports in the space sector varies due to the level of demand from U.K. exporters. Demand has risen in recent years, in part due to UKEF’s ability to offer guarantees for financing a complete “wrap” that incorporates manufacture, launch and launch insurance. Recent increases in demand also reflect the growing strength of the U.K. space sector.
UKEF is keen to develop its profile and role in this sector given the U.K.’s competitive strength, and the part that UKEF could potentially play in supporting its future growth.
How much of a satellite or space product must be built in the U.K. for UKEF to support it?
As for all sectors, UKEF is able to consider support for contracts where a minimum of 20 percent of the contract value is sourced from the U.K. However, UKEF has recently run a consultation on its foreign content policy to make it more flexible and ensure we recognise the full contribution of the U.K. supply chain – we will be publishing the government’s response in due course.
What percentage of U.K.-built satellites (in part or in whole) does UKEF support?
UKEF does not hold this data. As awareness of our offer increases over time we will be looking to strengthen that number though.
UKEF hasn’t been that active in the space industry compared to the export credit agencies of France, the U.S. and Canada. What are you doing to change that?
It is true that UKEF has not previously been a major player in the financing of satellites. The recent support provided reflects our determination to develop the U.K. space sector more widely, and the sector’s growing international success. Our project finance capability means that we are well placed to address some of the higher value and more complex structures we are now seeing in this sector.
The U.K. has several small launcher startups vying to do business. Will UKEF support them?
UKEF has a compelling offer for [small to medium enterprise] businesses covering credit insurance, working capital and buyer financing, and we welcome discussions on ways we can support launcher start-ups.
Does UKEF have a preference or responsibility to support small businesses, like the U.S. Ex-Im Bank, or does size not matter?
UKEF’s mission is to ensure that no viable U.K. export fails for lack of finance or insurance from the private sector. UKEF helps U.K. companies, whatever their size to win, fulfill and get paid for export contracts.
Now that the U.S. Ex-Im Bank has a full board again, will business that could have come to the U.K. instead go to the U.S.?
UKEF’s mandate remains the same, and we will continue to work with U.K. companies to ensure they win, fulfill and get paid for export contracts. We have a long history of working with U.S. Ex-Im to support projects in which there is both U.S. and U.K. supply, so [we] look forward to that collaboration continuing.
At least one British space company, Scisys, redomiciled in Ireland to stay in EU space programs. What would you tell other British space companies worried about losing business because of Brexit?
UKEF is working closely with other departments across government, in particular with the Department of International Trade, to ensure the transition for businesses is as smooth as possible. UKEF’s mission is one that is good for all weathers: to ensure that no viable U.K. export fails for lack of finance or insurance.
UKEF’s $325 million loan to Turkey’s Ministry of Treasury and Finance is the agency’s biggest space-industry loan. Will you do bigger than that?
We will consider all requests for our support on their merits! But certainly, there’s no upper limit on our support provided it fits within our risk appetite.
Would UKEF support a broadband megaconstellation? Or is that too risky?
Again, we will consider all requests on their merits!