Lessons of the Non-Tech Acquiring Tech Deal Of The Month

June 2022: Vinci Invests in hyperTunnel

Construction site

On 13th June 2022, Vinci, a global leader in concessions, energy, and construction businesses, announced a strategic financial investment in hyperTunnel. The deal is another step in Vinci’s core mission to design, finance, build and operate infrastructure and facilities that help improve daily life and mobility for all.

Note: Aquaa Partners acted as exclusive financial advisor to hyperTunnel on the transaction.



Tech – hyperTunnelhyperTunnel is a deep tech scale-up developing a revolutionary methodology for tunnels and underground schemes substantially faster, safer, more economically and more environmentally friendly than current techniques. hyperTunnel uses a unique combination of proven technologies from diverse industries – digital twins, robotics, 3D-printing and digital underground surveying, supported by AI and VR – to redefine possibilities in tunnel construction, enlargement, monitoring, and repair. In 2021, hyperTunnel announced its first significant contract with Network Rail.

Non-Tech – Vinci: Vinci is a global player in concessions, energy, and construction businesses, employing more than 200,000 people in ca. 120 countries. Significant concession assets include 4,400 kilometres of toll roads in France and 45 airports across 12 countries, making it the world's second-largest airport operator in terms of managed passenger numbers. The company’s contracting business is made up of three divisions, offering a broad variety of engineering and construction services.

DIGITAL TRANSFORMATION OF INFRASTRUCTURE SOLUTIONS

Founded in 2018, hyperTunnel’s patented methodology works by mapping a detailed blueprint of the desired underground structure and sending in hundreds (or thousands) of its proprietary, autonomous, cylindrical AI-powered swarm robots to carry out various tasks such as – surveying, drilling, installing access points, CNC machining chambers into the surrounding soil – and filling these chambers with high-strength construction materials.

The company then fills and stacks several of these modular chambers next to each other to ‘3D print’ the wider tunnel structure block by block… all performed by the swarm robots directly in the ground.

hyperTunnel recently joined Vinci Leonard as a member of the CATALYST programme, which provides the most advanced innovative companies with the means to deploy innovative services and products in partnership with Vinci companies. hyperTunnel also won the annual construction start-up competition in Miami last year, which Leonard co-organises with other major players in the sector such as Ferrovial and Cemex Ventures.

The techquisition-styled deal demonstrates Vinci’s ability to adapt to technological shifts and to serve its customers’ needs.

hyperTunnel believes that underground tunnels can be built substantially faster, safer, more economically and more environmentally friendly than current techniques, and that it can become the primary form of public transport.

"hyperTunnel's technology can be truly game-changing when it comes to improving the safety and sustainability of underground construction projects" 

- Guillaume Bazouin, Head of Start-up and Intrapreneurs Programs, Leonard

The deal rationale revolves around Vinci’s goal of rapidly responding to the climate emergency by enabling technological advances that have a substantial environmental impact.

"Vinci and Leonard are real experts when it comes to construction innovation, so to get their backing in such a concrete and substantial way means we must be doing something right. They can see the huge potential of the technologies we're developing, and they share our passion for improving how the world works. We're excited to see what we can achieve together over the coming months”

- Jeremy Hammond, Co-CEO and Co-Founder, hyperTunnel

ANOTHER TECHQUISITION DEAL GENERATES SIGNIFICANT SHAREHOLDER VALUE

Like most other techquisition deals, the market reacted favourably to the investment announcement given the positive outlook associated with the strategic potential of the investment and how it fits with Vinci’s business strategy.

Vinci’s share price increased by approximately 2% from 13 June to 24 June – versus an increase of 0.8% in CAC 40 – implying a market value addition of net ca. $610 million.

    INDUSTRY DISRUPTION

    The size of the “Global Construction 4.0” market is estimated to grow from $11.2 billion in 2020 to $29.1 billion by 2027 (CAGR of 14.6%).

    Digitization in the construction industry is termed as Construction 4.0, which uses technologies such as building information modelling (BIM), artificial intelligence (AI), and other technologies. Industrial 4.0 technologies are used in the construction industry to avoid human errors, repetitive work, and improve productivity of construction projects.

    Industry 4.0 adopts technologies for decision-making, and remains connected with each other through sensors and internet connectivity for construction activities.

    The trend demonstrates that IoT, big data, DevOps, and others are some of the technologies that are largely used in the construction industry. Major players, such as Autodesk, Oracle Corporation, and others, are offering construction management software specifically for the construction industry.

    For instance, in September 2020, Autodesk launched a new model for Autodesk construction cloud. This construction software is operated by using technologies such as Navisworks and BIM 360 model. This software helps to save time, maintain accuracy, decrease schedule risk, and avoid repetitive work at construction sites. Such product launches are anticipated to drive the growth of the Construction 4.0 market.

    The major players operating in the Global Construction 4.0 market have adopted partnerships, acquisitions, and product launches as key developmental strategies to improve the product portfolio of construction technologies. For example, in August 2020, Autodesk acquired Pype. Based in Virginia, U.S., Pype is a software company that is engaged in providing AI-based solutions for the construction industry.

    Infrastructure is relatively underinvested in advanced technologies compared to other capital-intensive industries. In the current environment, pressure from reductions in capacity and rising costs may encourage asset owners and project managers to accelerate the adoption of technologies such as artificial intelligence and robotics. There is also an opportunity to reduce maintenance capital expenses using technologies such as intelligent drones. These drones reduce the need for onsite workers, thus increasing safety, and they can dramatically improve preventative maintenance inspecting, scoping work faster than existing methods and providing more detailed information about required repairs.

    However, lack of skilled labour, high capital investment required, and lack of security are anticipated to hamper the growth of the Construction 4.0 market.

    On the other hand, rising awareness of IoT, BIM, and other technologies in construction is anticipated to provide lucrative opportunities for the growth of the Construction 4.0 market trends.

    The COVID-19 pandemic has forced many companies in the Global Construction 4.0 market to stop their business activities to comply with new government regulations to prevent the spread of coronavirus. This halt in business activities of Construction 4.0 industries directly impacted the sales of the Construction 4.0 market.

    For example, the sales of Hilti Corporation declined by 13.1% from FY 2019 to FY 2020. Further, reduction in the count of new coronavirus patients in the coming days is expected to be witnessed due to safety measures taken by governments and medicines launched in 2021. This is further projected to re-initialize the Construction 4.0 market players by adopting partnerships and agreements, which has aided the market recovery in 2022.

    Ultimately, the global shift to sustainable infrastructure will require interventions and collaborative actions from multiple participants. These include not just public– private cooperation and consolidated efforts, but also new ways of measuring impacts and the development of innovative instruments geared to financing green infrastructure projects.

    Also important at a national and regional level will be factors such as regulatory frameworks, subsidies, and tax regimes. These overlapping considerations mean the task of funding and building sustainable infrastructure is arguably one of the biggest and most complex challenges that the global financial and political system has ever faced. But it’s a challenge that must be overcome.

    CLEAR TRANSFORMATIONAL OPPORTUNITY

    Vinci’s investment in hyperTunnel is expected to revolutionise the highly labour-oriented construction industry. It completely aligns with Vinci’s goals of environmentally and socially responsible construction.

    The investment comes at a time of greater interest in tunnels, including through the form of hyperloop infrastructure, as an effective alternative to air travel. In December 2020, the EU made hyperloops a component of its mobility strategy.

    The strategic logic of the deal is clear: Vinci’s investment will enable hyperTunnel to further develop and test hyperTunnel’s tunnelling construction method in practical situations. The success of this technology in practical situations will enable Vinci to reduce the cost of tunnels and allow for the “global demand for increased, yet more sustainable transportation solutions, to be met”.

    THE QUOTE

    “It strongly aligns with our goals of rapidly responding to the climate emergency by enabling technological advances that have a substantial environmental impact. hyperTunnel also boasts exceptional leadership and engineering teams, and we are looking to support their great success in the near future” 

    - Guillaume Bazouin, Head of Start-up and Intrapreneurs Programs, Leonard

      Vinci’s investment is a great example of how a traditional business belonging to the energy and construction industry is actively engaged in the journey of transforming itself to deliver greater value to its stakeholders – particularly its shareholders and customers – by properly positioning itself for the future, ready to tackle any disruptions, especially in a pandemic.

      The essence of such a transformation unfolding is embedded in a strategy execution approach we have trademarked and call Techquisition, which my firm, Aquaa Partners, has designed and delivers to its clients every day as an experienced and trusted expert partner.

      Source(s): Aquaa Partners, Company Websites, Press Releases, PitchBook, Yahoo Finance, 3D Printing Industry, PR Newswire, Ground Engineering plus, Construction Europe, Allied Market Research, Mordor Intelligence, Innovation Origins

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