Rocket Science Pays Off as Musk Rival Avio Surges After Listing
(Bloomberg) -- Italian rocket manufacturer Avio SpA surged on its trading debut in Milan after becoming the first space-launcher specialist to go public in a sector crowded with newcomers including Elon Musk’s SpaceX.
Shares of Avio jumped 11 percent following the listing Monday, which came after a merger with investment vehicle Space2 SpA and marked the exit of private-equity funds led by Cinven Ltd., while doubling the stake held by Italian aerospace and defense group Leonardo SpA.
Chief Executive Giulio Ranzo said in an interview that Avio, maker of the Vega rocket, will now be able to tap capital in a more flexible way, something that’s crucial as the launcher industry is targeted by well-funded entrants such as SpaceX and Amazon.com Inc. founder Jeff Bezos’s Blue Origin LLC.
“Our industry is changing a lot,” Ranzo said. “There is an unprecedented move towards more and more commercial demand. If we want to be able to compete we need to be able to mobilize resources, invest in new products and bring them to the market.”
Avio acts as prime contractor and systems integrator for Vega, the rocket of choice for European launch-services provider Arianespace SA on missions involving small satellites typically weighing 1,500 kilograms (3,300 pounds) and destined for polar or low-earth orbits.
The Vega rocket first blasted off from the European Space Agency’s spaceport in French Guiana in 2012 and had made nine launches, all successful, as of March 7, according to Avio.
After the listing, Leonardo, formerly Finmeccanica SpA, has a 28 percent stake in Avio, while the rocket-maker’s managers own about 4 percent of its stock.
Ranzo, speaking before a listing ceremony in Milan, didn’t rule out further consolidation, while cautioning that “industrial combinations are difficult in our sector.” There will be “opportunities to distribute dividends,” he said, though no decision has been made to do so. “On the share price we have already done a lot for shareholders,” he added.
Avio shares traded 8.3 percent higher at 13.61 euros as of 1:39 p.m. in Milan, according to Borsa Italiana’s website. Space2 had surged more than 25 percent this year, ahead of the listing. The stock has room to advance further based on the company’s value relative to peers, Ranzo said.
Musk’s SpaceX reusable-rocket program competes in medium- and heavy-payload categories of up to 54 metric tons and is seen as a rival to the Ariane 6 system being developed by Airbus Safran Launchers and set to debut after 2020. Avio has a 3.4 percent stake in Ariane and will supply solid-propulsion engines and liquid-oxygen turbopumps to the new rocket.