Carol Reed/LONDON
While chief aerospace and defence players wrestle with complex super-mergers, second tier aerospace supplier, Anglo-French group Avicore, is planning its own expansion and has a European powerhouse for tactical reconnaissance, airborne data acquisition and recording systems and countermeasures in mind.
After acquiring UK-based specialist tactical reconnaissance and airborne countermeasures company W Vinten in 1996, Avicore purchased Enertec, the French-based data acquisition and recorder division of Schlumberger, and is now targeting companies elsewhere in Europe.
With an order book of just over £54million ($90 million) and operating profits of £6 million on turnover approaching £44 million, the group hopes to double its revenues in three to five years through selective acquisition of sensor and aerospace subsystem companies.
Avicore itself was only set up in 1996 to effect the Vinten purchase for £33 million, which was financed by institutional investor Barclays Private Equity and venture capital group 3i with Vinten's management taking 20% through a management buyout. Barclays also funded the £7 million Enertec buy last October and is ready to assist with further carefully selected purchases, according to Avicore's chairman, John Hartley.
Hartley, a director of US defence group Pacer Systems for 10 years and former managing director of UK-based aerospace contractor Electronic Systems International, is aiming for a full flotation on the London Stock Exchange by May next year at a minimum market capitalisation of £60 million.
"It depends on the market conditions," he cautions, explaining the current share price difficulties many engineering companies are facing. "We would like to see the FTSE Engineering companies trading back at around the 15 [price-earnings ratio] mark as they are grossly undervalued right now." Currently , the FTSE Engineering companies are trading at around 12, down from a peak of17 earlier this year. Hartley has signed up Guinness Mahon & Co, the London-based investment banker, to sponsor Avicore's listing.
With intelligence-gathering a central plank of 21st century defence planning, Hartley is confident that the projected compound growth of the Enertec and W Vinten businesses will hold Avicore's value despite stock market uncertainty.
Group chief executive Brian Hughes, Avicore's chief strategist, says the reconnaissance market will remain buoyant and he is looking to further build on Vinten's lead in the 25,000ft (7,600m) altitude and below market, especially in Europe. He is keeping a close eye on acquisition opportunities in Denmark, Germany, Italy and elsewhere that will provide organic growth to the core Vinten sensor (gathering and sourcing data) capability and Enertec's recording and replay expertise as well as Vinten's share of the airborne countermeasures market.
Vinten's pedigree dates back to 1909 in cinematography. The company designed aerial cine cameras for reconnaissance by military aircraft during the First World War. Today, its expertise is in low to medium altitude, high speed, tactical reconnaissance permitting close-up, real-time, confirmation of target data in all weather conditions and at short stand-off ranges.
CLOSE-UP NEED
As the need for close-up confirmation of target data to complement strategic satellite -based high altitude reconnaissance and surveillance assets grows in importance, air forces worldwide are turning to Vinten for improved real-time, low-cost sensors to retrofit their aircraft.
Royal Air Force Jaguars, Tornados and Harriers have all progressively been fitted with new generation "recce" pod systems for low level reconnaissance, especially for operation in the 1990/1 Gulf War, and since, for peacekeeping and monitoring operations .
A contract for new reconnaissance pods equipped with a suite of electro-optical, infrared (IR) and "wet-film " sensors for RAF Jaguar GR1Bs provides the springboard for Vinten to win upgrade contracts around the world. A ready customer base exists for the newer electro-optical (EO) and infrared linescan sensors which can provide comparable imagery to "wet film" sensors, but can also penetrate shadow and camouflage in all conditions and record on video tape for real-time datalinking to the ground and for on-board display.
The company is now exploring next generation dual-band, long-range, sensors for use in UAVs and future combat aircraft while "intelligent" pods are also under development which can be used to guide aircraft to pre-programmed targets.
Work as prime contractor for the RAF on a ground-based imagery exploitation system which will simultaneously interpret a range of aerial sensor imagery also moves Vinten into the heart of ongoing projects to develop joint services reconnaissance intelligence centres which will guide and control future operational mission planning.
Linked to this broadening of Vinten's base is the deepening of Avicore's presence in the space and intelligence markets. Enertec is a major supplier of high speed, high density, recorders to the US Government for classified satellite intelligence and tactical reconnaissance data retrieval and storage programmes. Key projects include the data recorders for the EO/IR imagery processing for the Advanced Tactical Aerial Reconnaissance System (ATARS) for US Air Force F/A-18C/Ds and for the US Navy's Trident submarine patrol acquisition and recording system (T-SPARS).
Enertec is now entering the high altitude reconnaissance and surveillance market with work on the digital recording system for the dual-band EO/IR sensor (RAPTOR) to equip RAF Tornado GR4s for operations above 40,000ft. A teaming with E-Systems of the USA could reap benefits if its bid is successful for the recording system for the RC-135 Rivet Joint series of ELINT/SIGINT platforms. Establishing a US subsidiary to improve customer support and its market presence in Germany is on the cards in the near term.
Source: Flight International
