Executive chairman Tony Taylor's odyssey with satellite communications equipment supplier Global Invacom began 10 years ago - with a single handshake.
The company, which is listed in both London and Singapore, began operations in 1986 as Global Communications. It was founded by Roger and Helen Pannell in the kitchen of their Essex home.
Mr Taylor, 54, who previously held roles in IT businesses ranging from semiconductors and automotive electronics to military and industrial components, was introduced to the founders in 2006 when they decided to retire.
The group then had a sister company - Invacom - which was losing money. "We had two sales teams, two business development teams, two finance teams, and they were all calling the same customers. It was obvious we needed to get the two entities together, but it wasn't easy - there were many egos at stake," Mr Taylor said.
Global Invacom was finally established in April 2008.
After buying out the Pannells and restructuring the merged company, Mr Taylor ran into another snag.
"At that point, some of our senior directors said they wanted to sell out. I was very disappointed, but I was able to line up a deal to sell the business to private equity for a good price."
MONKEY WRENCHES
In December 2009, a few days before the sale was due for completion, Global Invacom's principal contract manufacturer in China - Radiance Group - was placed in the hands of liquidators.
"That was quite a big setback - that supplier had all our tooling and test equipment on site, as well as seven to eight products that had been qualified by several key customers, so it would have been extremely challenging and time-consuming to move production and re-qualify all those products," Mr Taylor said.
Management decided to hold off the sale, and tracked down the liquidators to see if they could buy over the business. They paid £5 million (S$8.9 million) for a 52.4 per cent stake in Radiance Group, which triggered a mandatory cash offer that required a sum of another £5 million.
"That was when we hit a brick wall. We couldn't find a bank willing to loan us £5 million in 2010 to do the general offer, even though there was more than enough cash in Radiance - about £12 million - that could have been used to offset the loan," he said.
Pushed to the point of frustration, Mr Taylor approached the Pannells and the board for funding. "All of us threw in every penny we had, and pooled enough money... to take control of the company," he said.
In October 2010, Mr Taylor was appointed executive chairman of Global Invacom. He had another plan up his sleeve - to engineer the reverse takeover of Global Invacom by SGX-listed Radiance Group. Radiance, which provided electronics manufacturing services for the satellite communications industry, was listed on Singapore Exchange's (SGX) smaller board - known then as Sesdaq - in June 2003.
"It made a lot of sense to vertically integrate the two companies. Global Invacom represented 90 per cent of Radiance Shanghai's business - we drove the profits in the company then," he noted.
ROLLER-COASTER RIDE
The successful reverse takeover resulted in the group's backdoor listing on SGX in June 2012. Two years later, Global Invacom's shares were admitted to trading on the AIM Market of the London Stock Exchange.
Global Invacom has a market capitalisation on SGX of about S$44 million. Between 2012 and last year, its revenues grew from US$74.7 million to US$129.1 million (S$184 million). While the group was loss-making in 2012 and 2015, it reported net income of US$7.8 million in 2013 and US$4.3 million in 2014.
Its fortunes have since turned. The group swung to a net profit of US$700,000 for the three months ended Sept 30 this year from a net loss of US$2.7 million in the year-ago period, marking its second straight quarter in the black.
In the year to date, Global Invacom's shares have generated a total return of 9.6 per cent, compared with 4.2 per cent for the FTSE ST All-Share Index and 2.1 per cent for the benchmark Straits Times Index.
RIPE FOR CONSOLIDATION
Looking ahead, Global Invacom aims to capitalise on the rising number of acquisition opportunities in the satellite communications industry. "We're ranked third in the industry in terms of revenue, but No. 2 or No. 1 in profits. Our goal has always been to bring together different elements of the industry and become the largest player." Its 2015 purchase of US satellite terminals manufacturer Skyware Global for US$8.8 million was a case in point.
The group continues to evaluate consolidation opportunities as they occur, Mr Taylor said.
According to the Tauri Group, the average number of satellites launched per year between 2011 and last year has surged 36 per cent, while the global satellite manufacturing and launch market is projected to expand at a compounded annual rate of 5.1 per cent between 2014 and 2019. In particular, satellite TV demand is booming, and accounted for nearly 80 per cent of satellite consumer revenues last year.
The low-cost, ubiquitous coverage offered by satellites, particularly in remote regions where traditional terrestrial copper or fibre networks fall short of reliability and speed, has spurred developing Asian nations like Indonesia and Myanmar to switch to this technology, he pointed out.
Bank Rakyat Indonesia launched its own satellite from French Guiana in September to cut third- party transponder fees required to operate its ATM network, while the country's retailers are adopting satellite communications technology to facilitate basic services like credit card transactions, as shopping malls sprout up in remote areas.
Myanmar is grappling with the challenges of its mountainous terrain after the government liberalised its domestic telecommunications sector in 2013.
The country, which has an ambitious goal to provide broadband connectivity to at least 70 per cent of its 54 million- strong population in the next three years, has made satellite communications the backbone of its national broadband network, underscoring its advantages over terrestrial lines, he added.
CUTTING EDGE
Robust prospects aside, the spectre of rising costs continues to loom large. Staying abreast of industry advancements is another must, and Global Invacom's ability to develop new technologies in partnership with its suppliers is a key advantage.
The group has 59 granted patents, a further 65 patent applications, and a 30-year track record of pioneering new products.
"So we keep an eye on what's on the horizon, share our vision of where the technology is going, and decide if that fits our sweet spot. Options range from doing it ourselves, buying a development team, or using an existing team."
- This is an edited excerpt from Singapore Exchange's Kopi-C: The Company Brew column that features C-level executives of firms listed on SGX. A longer version can be found on SGX's My Gateway website: www.sgx.com/mygateway
