Journey to Space: ADB’s First Satellite Financing with Kacific 1

Transcript

Interview with Christian Patouraux, CEO, Kacific Broadband Satellites International Ltd

Broadband is still something new via satellite. Broadcast is still the bread and butter of the satellite industry. When I started Kacific I believe that something had to be done in the satellite industry in Southeast Asia and the Pacific because so many regions were unserved or underserved with broadband generally. And there’s very little infrastructure to address this very dense demand created by the high level of the population you have in those countries. So the satellite is perfect to deliver internet to those populations.

I started Kacific in 2013. We started traveling to the Pacific, started signing customers, started telling customers we are going to launch a satellite and that we can deliver bandwidth at a fraction of the cost you’ve been paying today. And then we ordered a satellite at Boeing. We started the construction of the satellite in February 2017. We then bought a launch vehicle, a rocket, from SpaceX in summer 2017. We need to find a lender to supplement the capital structure, to ramp it up. And along the way, we found ADB.

The value that ADB has brought to our project has been really substantial. Without financing, we wouldn’t be where we are today. And in order to get financing in this industry, you need to show long-term engagement from your customer. So generally there was a credit gap. So the ADB, because it’s a development organization, could fill that gap. And they look beyond just the creditworthiness. They look at the demand and also the development angle that Kacific could bring to the region.

The satellite was completed in October 2019. We held our breath just leading to the launch until the last minute glitch where we thought it’s not going to happen. Until I heard the roar – the rocket engine going off and seeing the rocket going off and seeing the rocket go in space. It was a wonderful sight. The satellite has worked perfectly. 

We’re rolling out to customers. We’ve seen various cases that have been addressed by Kacific. Cases of life-saving events that Kacific has been able to support thanks to local connectivity. That of course gives a tremendous and heartwarming motivation to the entire team and why Kacific is in all these regions. We’ve been, of course, hit by the mishap of COVID-19. It was a difficult start but we overcame the challenge. We changed a little bit of our strategy to adapt to the COVID environment.  

It’s been a great journey and I never thought seven and a half years ago that I’d be sitting here and telling that story.

Launching a satellite in space, putting it together from scratch, with a group of experts like our group but with no history in the company is extremely daunting. I’m very, very thankful that ADB managed to get across the daunting element of investing in space for the first time. There was a steep learning curve that they needed to go through and fortunately, they did. And it’s great to have them by our side as a magnet for other funds to start gravitating around the project. They attracted Leading Asia's Private Infrastructure (LEAP) Fund. 

So the credibility of the project was very much intertwined with the establishment of the ADB. We had other lenders interested and building up the syndicates together but ADB was always the good reference driving the project forward. In fact, we have started looking at developing our second satellite and we think we have a bright future ahead of us.