Segula Partners with ESG Mobility. Targets the Opel Account
Segula Technologies, the privately-held IT and ER&D service vendor, has announced a partnership with ESG Mobility, targeting the automotive sector.
Segula has positioned itself in the past year in the German ER&D services market, through the November 2017 acquisition of EK Design, a firm with 400 FTEs, and also through Technicon Design, an automotive design UK firm with a presence in the US and Germany. Altogether, Segula has gained some scale in the DA region with 550 FTEs, halfway through its critical size journey of 1,000 FTEs.
Why is Segula so interested in the German market? In all likelihood, Segula is targeting the Opel account. The company has historically been one of the two main ER&D service suppliers of PSA Group. ESG Mobility works with the main German automotive OEMs and has a presence in Rüssselsheim, where Open is headquartered. So a priority for Segula is to capture ER&D services opportunities at Opel and to do this, ESG brings some scale in the country.
ESG is also on a transformation. In 2015, its owners (Airbus Defense and Space, Rohde & Schwarz, Thales Electronic Systems, and Northrop Grumman Litel) sold their stakes to an unnamed PE firm headquartered in Munich. ESG, which is also headquartered close to Munich, now operates under three brands, targeting the automotive sector (ESG Mobility), IT security services (Cyoss), and Defense & Public Security. ESG has a headcount of 2K and 2017 revenues of EUR 293m.
ESG Mobility is the largest unit of ESG and has one 1,000 FTEs. The unit is aiming to rebalance its services portfolio towards digital automotive, e.g., ADAS and& embedded software, HMI & infotainment, connected car, eMobility, transportation, and Car IT. The company has hired a former CEO of EDAG, Jörg Ohlesen, who is both CEO of ESG Mobility and of the full ESG.
Will the partnership work? I am not fond of this type of deals: their governance can be complicated, and they usually rely on joint GTM on selected opportunities.