Indra’s has become one of the most sought-after desks in the defense sector in Spain given the strong growth in public budgets expected for the coming years. The Government and the company itself have conspired to turn it into the ‘consolidator agent’ of a market that is going to gain a lot in the coming years due to the increase in public budgets. The family manufacturer Escribano has just hit the table by reaching an 8% shareholding position that gives it the right to a director. Sapa remains, while the company led by José Vicente de los Mozos has taken the step of entering the engine turbine manufacturer ITP, with the intention of even gaining more positions when Bain Capital begins to fold its sails.
This desire of the Government itself, through Sepi, and the company to grow in size and be the center of the defense business map has led Escribano to ask for his place. The company admitted this Friday that this operation “will contribute to the development of current and future defense programs.” Moncloa’s relationship with the company run by the Escribano brothers has been relatively close in recent years. Its dependence on the public budget is, like other actors in the sector, very high.
The Tres Cantos-based firm, specialized in weapons stations and electro-optical systems, seeks not to be left out of that ‘cast’. In his 2022 report, he insisted that his entry would allow him to participate in those decisions that could affect him “so that a collaboration framework is achieved in which business is developed favorably for all participants.” The company is aware that relevant decisions for the sector will be made around that table and they want to be part of it despite the fact that its size is small compared to the rest. It closed 2022 with 91 million euros of revenue, of which 77.8 million were from engineering and just over 13 million from production.
The example of Sapa Placencia is there. The company reserved -although with a contract signed with Deutsche Bank- 90 million euros to acquire 5% of the listed holding company (83 million were financed with the credit institution). During 2022, the company recorded revenues of practically 47 million euros, which was almost doubling the 28.5 million of the previous year. The company assured investors in its documentation that its entry into Indra “will allow the company to generate enormous opportunities and place it in a strategy with a larger dimension and with a clear vocation for growth and diversification.”
Scribe is an old acquaintance for Indra. They have coincided in several strategic projects launched by the Ministry of Defense. Their relationship has experienced relatively complicated moments in some of them, according to sources in the sector. Even so, his arrival accelerates that race to be the great national defense group. And his announced increase in shareholding is moving in that direction. The Basque manufacturer Sapa has already entered 2021 in the Executive’s attempt to create a hard core (which led to the shakeup experienced at the 2022 meeting with the dismissal and resignation of a good part of the independents). These are two of the most relevant system manufacturers on the Spanish defense scene.
In addition to these two, there are others who for now remain on the sidelines of this race to sit at Indra’s table. One is Tecnobit-Grupo Oesía, which has not made a move although it has responded to the call of Sepi to acquire, together with Indra itself, 60% of the strategic Epicom still in the hands of Duro Felguera – both have taken a 30% % each-. Another is Santa Bárbara, another relevant contractor but whose shareholding nature is very different since it is part of the Canadian group General Dynamics as a subsidiary. And finally, there is GMV, which has been walking independently in recent years.
The case of Santa Barbara is peculiar. Yes, it has a business relationship with the listed company chaired by Marc Murtra. He lives with her, with Escribano and with Sapa Palacencia in Tess Defense, the ‘joint venture’ of the three that was commissioned to manufacture the 8×8 combat vehicle for more than 1.7 billion. There have been problems in this contract, which have ended up in court, due to “penalties” of several million euros imposed by Defense. The reality is that from now on, if as planned, three of the four actors will be allied under the roof of one of them, Indra.
More defense budget
The President of the Government himself, Pedro Sánchez, called months ago, after the outbreak of the war in Ukraine, for a consolidation of a “fragmented” defense sector in Spain. And Indra’s own CEO, José Vicente de los Mozos, warned his shareholders at the general meeting that took place in the middle of this year that they had prioritized gaining scale in Spain through acquisitions to be that ‘national champion’ before look beyond borders. These shareholding movements bring together several relevant industrial players around the Indra table. And everything indicates that there will be more soon.
The backdrop of this chess game is that of a defense sector that is rubbing its hands with a strong growth in public defense budgets in the face of the increased war climate. According to the latest report from the TEDAE employers’ association, last year the total turnover of the Security, Defense, Aeronautics and Space market grew by almost 16% to exceed 12,000 million. The objective is for this figure to grow significantly in the coming years. And all the players want to participate in the ‘distribution’.
THE NAIS IS OFFICIAL EDITOR ON NAIS NEWS