AE Industrial Partners (AEI) announced on Tuesday that it plans to acquire a majority stake in satellite systems provider York Space Systems.
According to a report by CNBC, AEI acquired a 51% stake in a deal that values York at $1.125B, making it the next space “unicorn.” AEI declined to comment on the terms of the deal.
AEI 101: The private equity firm has a long history of investing in aerospace. It currently holds sizable stakes in big players like Virgin Orbit, Sierra, and Firefly.
- In late 2020, AEI created Redwire by merging Adcole Space and Deep Space Systems.
- This week, Redwire also agreed to acquire a company. All this AEI-associated M&A activity is giving us Russian nesting doll vibes.
It’s been a busy week for AEI
On Saturday, Firefly successfully sent its Alpha to the black on only its second try. “The team at Firefly has been through a lot over the last few years, especially over the last 12 months,” AEI partner Kirk Konert told Payload. “To really see their hard work come to fruition with that launch…is pretty, pretty special.”
- Firefly is targeting six flights in 2023, then a monthly cadence in 2024.
- A weekly launch cadence is “far out,” Konert said, but remains the north star.
Just a few days after Firefly’s launch, AEI announced the York deal.
“We believe it’s a once-in-a-generation opportunity to invest in the space sector,” Konert said. “We want to find the best opportunities to invest in that sector. York, from our perspective, is the best opportunity in small spacecraft right now.”
York Space Systems
The Denver company is bucking the tradition of building bespoke satellite systems for each mission.
Once the satellite bus is built, York “can then integrate whatever payloads [are] needed for the particular mission, whereas historically, every new mission required a new engineering of an entire spacecraft,” Konert said. “We don’t need to do that.”
By using similar techniques as those used in jet engine production lines, Konert said, York has positioned itself well to scale up mass production of its small satellite buses. York’s two Denver facilities boast 165,000 sq. ft. of space and the capacity to make 750+ buses a year.
The company is not currently manufacturing to that capacity, Konert said, but plans to scale up production with the influx in capital brought on by AEI’s acquisition.
AEI sees York systems as “a much, much cheaper, better alternative than its competitors are now,” Konert said.
York has a backlog of over $1B in orders, including a $382M contract from the Space Development Agency (SDA) to supply 42 satellites for the Transport Layer Tranche 1 constellation. Under the same contract, Lockheed Martin and Northrop Grumman are providing the same number of satellites for $700M and $692M, respectively.
“It’s a cost differential,” Konert said. “York provides the same spacecraft that our competitors can provide at half the cost. That’s a pretty compelling proposition to the customer.” York also has a $94M contract with the SDA to provide 10 satellites for Tranche 0, which is set to launch early next year.
Looking forward…Besides scaling up manufacturing, York is planning to leverage its new relationship with AEI to build its network at the DoD. The company is positioning itself as the go-to manufacturer for proliferated systems in LEO.