Private Equity Dominates Satellite Industry Investments in 2023

Private equity firms have been making significant investments in satellite companies, with nearly half of all deals in 2023 being backed by private equity and venture capital. This surge in investment is driven by a combination of national security concerns, improving industry economics, and the growing demand for satellite data from commercial and government clients.

According to data from S&P Global Market Intelligence and Crunchbase, private equity and venture capital firms were behind 49% of the 108 M&A deals and funding rounds targeting satellite-focused businesses in the past year. This marks the largest share of investment volume in the satellite industry by private equity since at least 2019.

Industry trends such as the decreasing cost of space launches, the industrialization of satellite manufacturing, and the increasing demand for satellite data are attracting private capital to the sector. Kirk Konert, a managing partner at AE Industrial Partners LP, noted that satellite companies are selling data to commercial and government customers, making them an attractive investment opportunity.

The national security factors, including government demand for satellite data in response to geopolitical events like Russia’s war in Ukraine, have further driven the demand for satellite data. Companies based in the US and Canada have attracted more private capital than those in Europe, with a focus on defense trends in the US driving large investments.

While private equity’s share of the satellite industry has grown, the announced value of deals has seen a significant drop in 2023. Private equity- and venture capital-backed investments totaled $1.19 billion, down more than 87% from the previous year. However, global private investment in the broader space sector has been increasing, suggesting a revival after two years of declines.

Stable government demand for satellite data has made the sector an attractive investment opportunity for both venture capital and private equity investors. Companies like OHB SE and Maxar Technologies Inc., with large government contracts and revenue-generating operations, have drawn traditional private equity investors into the satellite industry.

Overall, the satellite industry continues to see strong investment interest from private equity and venture capital firms, driven by a combination of national security concerns, industry trends, and growing demand for satellite data.