Malaysian drone firm Aerodyne to seize global M&A opportunities amid virus turbulence

The COVID-19 outbreak has not stopped Malaysia-headquartered Aerodyne Group from snapping up assets as it continues to carve out its global expansion plans.

The integrated drone service provider has set an aggressive two-year plan that sees it completing as many as seven mergers and acquisitions in a bid to command 10 per cent of the global market share by 2024. Now, Aerodyne sees opportunities emerging in distressed investments.

The group announced on Wednesday that it had acquired a controlling stake in Middle Eastern drone player FEDS Group Holdings. The value of the deal was not disclosed. Aerodyne said the acquisition will strengthen its position in the region with DT^3 (Drone Technology, Data Technology and Digital Transformation) technology.

In an interview with DealStreetAsia, Aerodyne founder and chief executive officer Kamarul A Muhamed revealed that the group hopes to close one more big deal this year. It is currently in talks with five smaller drone service operators from Australia, Latin America, and Europe for potential M&As.

“We think the dynamics of the market may change after COVID-19 and the oil price crash, and there will be more opportunities for us to capitalise on,” said Kamarul.

Aerodyne’s ambitions have attracted a host of international venture capitalists who are keen to capitalise on drone technology and its applications. Early this year, the firm closed a Series B funding round of $30 million. The round saw participation from Korea’s InterVest, Silicon Valley’s 500 Startups, Indonesia-based Kejora Ventures, India’s Arc Ventures, Japan’s Leave a Nest and China’s North Summit Capital.

The company has been adopting the inorganic route to expand its operations.

Last year in December, Aerodyne acquired a 60 per cent stake in the inspection services business of Measure UAS, Inc., an aerial intelligence company. While the price tag was not publicly disclosed, according to Kamarul, the deal was “a lot more than 10 million ringgit.”

In 2018, the group bought a 60 per cent stake in Denmark-based wind turbine blade inspection company AtSite for 10.6 million ringgit ($2.7 million) in the hope of bringing an additional 96.4 million ringgit ($24.6 million) to the group’s revenue over a three-year period.

The acquisition of FEDS will pave the way for Aerodyne to strengthen its position in the Middle East, as the former has already conducted thousands of commercial operations for some of the biggest companies based there.

“FEDS provides us with a strong foothold to accelerate our expansion into the Middle East. By combining our expertise and its local content, we have created a platform, which is primed to be the market leader in the region and will supercharge our next phase of growth,” Kamarul added.

Following the transaction, FEDS will continue to provide premium turnkey aerial inspections of infrastructure assets in the energy utilities, geospatial survey, public infrastructure and telecom sectors.

Kamarul’s plans for Aerodyne include an initial public offering by 2024. And he does not rule out the possibility of accelerating funding plans if more M&A opportunities arise amid a recession.

“Before we list, we intend to raise one more funding [round],” Kamarul told DealStreetAsia, indicating that it will take place in the second half of 2021. “I am taking this recession positively, we can raise another funding in the near term because the opportunity is very exciting now.”

Yet, whether the M&A-fuelled company will continue to attract global investors remains a question following the recent political change in Malaysia.

One of the key drivers of growth for Malaysia’s drone industry was the previous government’s push to make the country a regional drone hub. The government actively pitched Malaysia as a global drone technology testbed to multinational corporations.

In an earlier interview with DealStreetAsia, Malaysia Digital Economy Corporation’s chief operating officer Ng Wan Peng said that the government would continue to offer opportunities for global companies to invest in Malaysia’s drone sector.

“Malaysia has more than 12 companies involved in the drone business. Some of them are doing well regionally,” she said, adding that the government is also helping sectors such as agriculture to adopt drone technology to improve farmer productivity and income.

Nevertheless, it remains to be seen whether prime minister Muhyiddin Yassin’s government will continue former prime minister Mahathir Mohamed’s efforts to build up the local drone sector.

“The political change definitely has an impact on investor sentiment, and policy changes may also happen in (the) future,” Kamarul acknowledged. “But I don’t see any reason that we will be affected significantly as our business is operated globally.”

The global drone service market is projected to grow to $63.6 billion by 2025, from an estimated $4.4 billion last year, representing a compound annual growth rate of 50 per cent.

Kamarul said Aerodyne has received interest from potential investors from Australia, Europe, the US, and South America.

Aerodyne currently has presence across 25 countries across the Asia Pacific, the Middle East, Americas and Europe. It managed more than 300,000 infrastructure assets with 110,000 flight operations and surveyed in excess of 100,000 km of power infrastructure globally.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.