Rolando Grandi, a fund manager with La Financière de l’Echiquier has highlighted the huge opportunities linked to the development of the space sector, with many companies expected to go public in the coming years.
Thematic funds are in vogue, and management companies are vying for ingenuity in proposing new and original strategies. For the past few weeks, La Financière de l’Echiquier has been offering a new strategy called Echiquier Espace, which invests in the many developments underway in the commercial exploitation of the Earth’s orbit, and (in the longer term) in the exploration and colonisation of the solar system.
Depth
Grandi pointed out that the thinking behind the creation of this strategy began in 2018. “We quickly considered space as the next theme we wanted to position ourselves in. It is an industry that today benefits from a convergence of knowledge at the industrial and technological level, used in the production of space assets (rockets, satellites, etc.).”
“It also benefits,” he continued, “from all the developments in areas such as artificial intelligence, which today allow the emergence on the stock market of a set of new players, on which we can now build an investment strategy, what we now call Space 2.0.”
This segment has seen the arrival of a large number of companies on the stock market in recent years, with a depth that now reaches around one hundred stocks with a capitalisation of $400 billion. “The number of companies with space exposure is expected to grow rapidly, with market depth expected to triple or quadruple over the next few years,” he said.
Democratisation
Grandi stressed that he has a global approach to the space sector, with exposure to the entire value chain. “Everyone has names like SpaceX (Tesla) or Blue Origin (Amazon) in mind, but there are a huge number of lesser-known but equally impressive new players such as Astra, Maxar, Iridium or Rocket Lab.”
This boom has been made possible by the arrival of a large number of private players in an activity previously occupied solely by public agencies. “These players are much more concerned with democratising launches„” he said. “The cost of sending a space asset into orbit has been reduced by a factor of ten over the past decade.”
He said he expects this cost pressure to continue at around 10% per annum over the next few years, thanks in particular to the 3D printing techniques that are already being used to build rockets.
The democratisation of access to space has enabled the rise of a large number of companies active in monetising data collected in orbit through a wide range of different applications, such as logistics, transport, precision agriculture, insurance and climate change monitoring. “This is a new ecosystem of companies that need this data in real time, and it is opening up to investors today.
Sustainability
The issue of sustainability is now central to the approach of many groups, especially since launching a rocket requires a significant release of energy in order to break free from the earth’s gravity. “We are now moving towards companies that have a responsible approach in terms of sustainability in their link with space, and that use less polluting propulsion systems such as methane and especially hydrogen.
The latter propulsion mechanism, used in particular by Blue Origin (Amazon), involves combining hydrogen and liquid oxygen to release power, with a rocket that expels… water (H2O). The use of water as a propulsion mechanism is also central to the desire of the many players to settle on the Moon permanently, as the use of the ice present on the poles of our satellite could allow rockets to refuel, and to use the Moon as a launch base for Mars (as freeing oneself from the lunar attraction requires much less effort than freeing oneself from the Earth’s attraction).
Mars and beyond
In the longer term, the exploration of the Moon and Mars are significant opportunities, as are more distant projects (such as the study of rare gases in the atmosphere of Venus or the exploration of certain moons of Saturn or Jupiter): “Artemis (NASA’s lunar programme) envisages a return to the Moon by 2025, and the Martian programmes are even further away (not before 2030 in the most optimistic scenario). However, they are already the subject of orders at the moment, and it therefore makes sense to follow developments on these still very distant projects.”
Finally, even if the opportunities are still concentrated in the United States and Europe, the diversity of space is also likely to grow in view of the programmes under development in many countries, particularly in Asia. “India and China, for example, have very ambitious programmes, but the companies active in this market are still state-owned. The transition to the private sector has not yet begun in these countries, but it is a segment that should eventually be a growth driver for the entire sector.”