One of the top global suppliers of automotive technology solutions, Sona BLW Precision Forgings Ltd. (Sona Comstar), has agreed to purchase a 54% equity stake in NOVELIC, a Serbian business founded in 2012 that excels in the production of mmWave radar sensors, perception systems, and full-stack embedded systems.

 

By combining primary and secondary purchases with a staggered payment structure in the ratio of 60:20:20 at closing and in 12 months and 24 months, respectively, Sona Comstar will purchase this 54% equity holding in NOVELIC for Euro 40.5 million.

 

With an implicit valuation multiple of 26 times CY22 anticipated PAT, the transaction values NOVELIC at an enterprise value (EV) of EUR 64.5m on a pre-money basis and EUR 75m on a post-money basis. The deal is subject to the usual closing conditions and is anticipated to close by the end of Q4 FY23.

 

ADAS sensors are a rapidly expanding sector of the automotive industry, with a potential market size of over USD 43 billion by 2030. It is one of the very few high-tech, successful, and rapidly expanding businesses in the ADAS sensor market.

 

Sona Comstar anticipates that the acquisition will result in EPS growth in the first year and substantial growth potential over the next few years. According to a press release from the firm, NOVELIC has been profitable every year since its establishment, with CY22 revenue and PAT estimates of EUR 9.3 million and EUR 2.5 million, respectively.

 

Sona Comstar is entering the ADAS sensor industry as part of its strategic roadmap. NOVELIC has vertical integration across the whole value chain, from hardware and chip design to machine learning and perception software. Its partners include major global automobile OEMs, producers of autonomous vehicles, Tier-1 suppliers, and chip companies like Infineon and Texas Instruments. In order to address the megatrends of rising vehicle autonomy and automation, Sona Comstar has begun developing its third business area, ADAS Sensors and Software, with the acquisition of Novelic. 

 

Globally, in-cabin sensing is becoming a crucial component of vehicle safety. Leaving kids and animals in locked cars has led to hundreds of heatstroke-related deaths globally. Child presence detection (CPD) is a requirement of government legislation and automotive safety assessment criteria for new car models. A 5-star rating under Euro NCAP 2023 involves the detection of children.

 

According to the announcement, NOVELIC's mmWave radar technology is the ideal option for in-cabin sensing because it is I very accurate ii) less expensive iii) and iv) protects the privacy of passengers.

 

NOVELIC's in-cabin monitoring solution uses a sophisticated radar design and signal processing algorithm to identify several things, including life presence (LPD), kid presence (CPD), and seat occupancy (SOD). As it operates in all lighting conditions, picks up vital signs (heart rate and breathing), and finds things anywhere in the cabin, NOVELIC's in-cabin solution is extremely accurate.

 

The mmWave radar-based technology from NOVELIC eliminates the need for weight sensors and related wiring harnesses, saving automakers a lot of money. mmWave radar-based in-cabin sensing, as opposed to cameras, safeguards the privacy of passengers.

 

According to the sources the present NOVELIC team, led by its founders Darko Tasovac, Veljko Mihaljovic, and Veselin Brankovic, will keep running the firm while utilising Sona Comstar's size and client base for growth.

 

The founders will end up owning 46% of Novelic after the deal is done. In the field of mm-wave radar sensing and systems, NOVELIC has been active on the market for more than ten years, employs more than 130 engineers in interdisciplinary teams, and is the holder of numerous international patents. Over the past ten years, it has expanded at a CAGR of more than 50% without obtaining any outside equity financing.

 

Given a shared cultural commitment to innovation, technology, and profitability, Sona Comstar's managerial bandwidth will be increased by the acquisition of NOVELIC.

 

Commenting on the acquisition, Vivek Vikram Singh, MD and Group CEO, Sona Comstar, said, "I am excited to welcome NOVELIC to the Sona Comstar family. With this acquisition, we have added market-leading in-cabin radar-sensing technology to our technology offering. Increasing vehicle autonomy and automation is an emerging technology revolution in our industry. As we had done with EVs in 2016, we are taking a meaningful early step in the direction of the Electrified Autonomous Vehicle or e-AV. NOVELIC adds the hardware and software capabilities to design integrated systems for autonomous driving, including AI and ML as well as ASIC experience, to what we already have in mechanical, electric and electronic abilities. It is the beginning of building our third business vertical of sensors and software. In addition to its technology prowess, Novelic is unique in its approach to profitability and sustainable growth. In many ways, NOVELIC is like Sona in how we value money, technology and growth."

 

Veljko Mihajlovic, co-founder and CTO of NOVELIC, said, "NOVELIC was founded with a clear mission to develop end-to-end capabilities in mmWave radar technology and to commercialize it through various product lines. We started as a team of 5, and today we are over 160 people, among which 130 engineers and 10 PhDs, developing product platforms at various European locations. We have managed to do it organically by providing value to our customers and generating and growing our revenue and profit year after year. For moving to the next phase of our growth, we are delighted to have a strategic partner in Sona Comstar which shares the same commitment to innovation and technology and will support us in scaling up our business. The moment we first interacted with the Sona Comstar team, we knew this was 'the one' because we had a great alignment of core values."