Yavne-based unmanned aerial vehicle (UAV) manufacturer Aeronautics yesterday published an initial draft prospectus, and began its roadshow for an IPO on the Tel Aviv Stock Exchange (TASE). As part of the IPO, the company's existing shareholders hope to sell half of their holdings in the company at an ambitious company value of $300 million (NIS 1.1 billion). Amos Mathan is CEO of Aeronautics, and its chairman is former Israel air force commander Eytan Ben Eliyahu.
If investment institutions are persuaded to invest at the sought after value, the company shareholders, headed by the Bereshit and Kedma Capital funds, which each own 27% of the shares, and Viola Group, with a 23.4% stake, will sell existing shares for NIS 500 million and post impressive exits.
The company itself is seeking to raise NIS 80 million through an issue of new shares. Leumi Partners Ltd., with Discount Capital Markets, Menorah Mivtachim Holdings Ltd. (TASE: MORA), Leader Capital Markets Ltd. (TASE:LDRC), and Epsilon Investment House Ltd., is leading the offering.
Founded in 1997 by Avi Leumi, the Aeronautics group provides intelligence solutions based on UAV systems with a variety of UAVs having diverse configurations and capabilities, electro-optical systems, sensor and communications systems, observatory balloons, and drones. The company develops, manufactures, and markets small and medium-sized UAVs for armies and civilian agencies throughout the world. Aeronautics is considered Israel's fifth largest defense company, after Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), Rafael Advanced Defense Systems Ltd., and Israel Military Industries Ltd. (IMI).
Growing sector
Aeronautics has a number of subsidiaries: RT (observatory balloons), PoziDrone (drones), Controp (observation systems, lenses, and electro-optics), Commtact (communications and encryption solutions), and Zanzottera (UAV engines). Aeronautics also manufactures UAVs, and the subsidiaries make components and supplementary products for its business, so that the entire supply chain is within the group, with no dependence on external parties.
Aeronautics's reports show that 35% of its revenue last year came from Europe, 30% from Asia, 18% from Israel, 10% from the US, and 7% from Africa. The company has 660 employees and 70 customers in 52 countries. Two of the customers are very important, with one accounting for 20% of Aeronautics's revenue last year and the second for 13%. Termination of the company's agreements with either of these two customers for any reason is liable to deal a serious blow to its business results. Aeronautics's revenue rose from $104.4 million in 2015 to $111 million in 2016, while its net profit dipped from $22.3 million in 2015 to $18.1 million in 2016.
Aeronautics's market is on an upward trend. A presentation published by the company shows that the global UAV market totaled $10.7 billion in 2016, and sources said that the sector was likely to continue growing in the coming years.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 22, 2017
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