EDF Pulse Ventures, the EDF Group's corporate venture capital arm, invested in French startup Ekoscan in 2022. This firm has recently divested its stake as part of Ekoscan's leveraged buyout (LBO1), which was backed by the France Nucléaire 2 fund. Michel Hunsicker, Senior Investment Manager at EDF Pulse Ventures and former Ekoscan board member, reflects on the EDF Group's partnership with the startup.
EDF Pulse Ventures acquired a stake in Ekoscan in 2022. What motivated this investment?
Ekoscan specialises in non-destructive testing for industrial infrastructure. The company's core business involves designing, manufacturing, and marketing measurement systems. This activity is complemented by a service offering for implementing non-destructive testing solutions. These tests are designed to detect potential damage, such as cracks and defects, in components or infrastructure during both manufacturing and maintenance phases.
EDF's nuclear teams were already collaborating with the startup, particularly on stress corrosion issues. They sought to strengthen ties with this innovative company and co-develop new measurement instruments tailored to EDF's specific requirements. Convinced by this business need, as well as by the quality of the startup's products and services and the calibre of its management team, EDF Pulse Ventures acquired a stake in Ekoscan in 2022.
What have been the benefits of this investment?
By investing in Ekoscan, we secured a seat on the company's board, giving us a voice in the startup's strategic direction. This strategic investment enabled us to strengthen our relationship with the company and sign a co-development agreement with the Engineering and Supply Chain Division (DISC) for a new measurement instrument. We were also able to develop new use cases aligned with the Group's requirements.
As a shareholder, EDF has been able to share its industrial expertise with the Ekoscan teams and support their development. With backing from the nuclear teams and EDF Pulse Ventures, Ekoscan has become a key partner and supplier within the Group for non-destructive testing.
Given the positive relationship, why did EDF Pulse Ventures decide to sell its shares?
As a corporate venture, our role is to invest in young companies with the aim of generating financial returns and synergies with the Group's business units. We don't intend to remain shareholders in our startups indefinitely, but rather to exit when the timing is right. This may correspond to an attractive exit opportunity and/or reaching the point where synergies have delivered their full potential to the EDF Group. In Ekoscan's case, we were clearly in the first situation.
Over three years, Ekoscan completed several acquisitions in Europe and North America, strengthening its core activities and adding new capabilities, particularly in manufacturing robotic systems (AUT Solution) and repair systems using composite materials (3X Engineering). Beyond this external growth, Ekoscan has also developed organically and can now be considered a mid-cap enterprise (ETI). This new status requires different support than what a corporate venture provides, so it made sense to pass the baton by divesting our shares whilst seeking to maintain the synergies between EDF and Ekoscan through the France Nucléaire 2 fund (of which EDF is a partner) joining Ekoscan's shareholder base.
What impact will this sale have on EDF's relationship with Ekoscan?
The EDF Group will maintain a shareholding connection with Ekoscan through the France Nucléaire 2 Fund. The France Nucléaire fund is particularly relevant as it is currently backed by four major companies: EDF SA, Framatome, Orano, and Technicatome. Its mission is to invest in SMEs and mid-cap enterprises within the nuclear ecosystem to support them in their next growth phase.
Additionally, the long-term collaboration between the Group's nuclear business and Ekoscan teams, as well as the partnerships initiated with other Group businesses, will continue unchanged. A relationship of trust has been established with the Ekoscan teams and will continue to flourish.
If you had to highlight one key takeaway from EDF's experience with Ekoscan?
It's undoubtedly a success story and confirmation that the EDF Pulse Ventures model enables us to achieve our dual objective of generating synergies with EDF Group's businesses whilst delivering profitability.
1 A leveraged buyout (LBO) is a financial transaction in which a company is acquired through a specially created holding company, primarily using borrowed funds.