Investment Bank: Unmanned Systems Deals Increased Dramatically in 2015

Westbury Group LLC, a Westport, Conn.-based mid-market investment bank, says 2015 was by far the strongest year on record for capital markets transactions in the unmanned systems industry, according to the firm’s Drone and Unmanned Systems Capital Markets 2015 Year in Review.

The report is based on a comprehensive database of mergers and acquisitions (M&A), as well as venture capital and other capital raises.

“The spike in the number and value of deals in the Drone and Unmanned Systems Capital Markets 2015 Year in Review was truly extraordinary,” states Jon Rubin, a partner at Westbury and head of the company’s drones/unmanned systems practice. “This was the year that corporations, investors and the public-at-large realized that unmanned systems mean a lot more than just hobbyists’ quadcopters.”

The number of equity capital raises, including venture capital, increased 98% from 41 deals in 2014 to 81 deals in 2015. Specific funding amounts were disclosed in 65 of those deals. The amount of capital raised in the disclosed deals totaled $571 million – up 186% from a total of $200 million in 2014’s disclosed deals.

M&A in the sector also saw a dramatic increase, says the bank. The number of deals identified increased 60% from 10 in 2014 to 16 in 2015. By far, the largest deal was Harris Corp.’s $4.75 billion acquisition of Exelis Inc.

The most active segment for the drone/unmanned systems capital market transactions was the air-based segment, followed by supporting systems and services. The land- and maritime-based segments saw less activity.

There were four funding deals north of $50 million, and all were in the air-based segment, including Aeryon Lab’s $60 million round from Summit Partners; Yuneec’s $60 million round from Intel; and 3D Robotics’ $64 million Series C round from a consortium of 17 investors, including WestSummit and Mayfield.

The largest deal of the year was Accel Partners’ $75 million funding of DJI, according to the bank.

Although the report focuses primarily on 2015, Westbury is tracking 2016 deals and says the signals, so far, are mixed.

The bank notes Intel’s January acquisition of Ascending Technologies. In addition to Intel’s August 2015 Yuneec investment, these acquisitions are highlighting the importance of the unmanned sector for the broader technology industry, according to Westbury, which adds that it remains to be seen whether the decline in worldwide public capital markets in the first half of the year will reduce investors’ appetites for drone deals.

Rubin will present Westbury’s updated analysis, including full 2016 first-quarter results, at the Association for Unmanned Vehicle Systems International’s Xponential 2016 in in New Orleans.


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