RFID firm Datamars finds new investors

Datamars is a pioneer in making handy readers and tags for tracking animals (pic: Vibrac)

Bedano-based Datamars, a 19-year-old company that makes systems for tracking and identifying laundry and animals, has signed up new investors ready to expand the company

This content was published on April 1, 2005

A consortium of private-equity investors from France, Switzerland, Belgium and Germany announced on Thursday that they had bought a majority stake in the radio frequency identification (RFID) company for €12 million ($15.56 million).

Datamars, located near Lugano, is best known for making tiny radio tags containing chips with unique 12-digit codes. Read at a short distance without requiring contact between the reader and the transponder, the codes enable identification by radio.

Its systems enable industrial-scale laundries to keep track of items as they flow through a plant. This application alone has used some 50 million tags in recent years, according to the firm.

Its implantable tags for animals are distributed by the veterinary divisions of Germany’s Bayer, Virbac of France and Switzerland’s Novartis.

Investing in proven success

Datamars, which employs 70 staff, had annual sales last year of €13 million, up 28 per cent on the previous year.

These figures attracted Paris-based Iris Capital and Invision of Zug, Switzerland, which then created a consortium, bringing in Frankfurt-based CornerstoneCapital and Brussels-based Universal Capital Partners, to take over the firm.

The new investors are buying out early Swiss investors in Datamars, Innovent Capital of Zurich and Zurmont Finanz of Risch, which first invested in the firm in 1996.

The consortium now holds 75 percent of the company, with Datamars’ founder and CEO Parvis Hassan-Zade retaining a sizeable stake.

Datamars is now owned by so-called expansion-stage investors, as opposed to early-stage venture capital investors. Such investors are continuously looking for companies, often technology-oriented, that are earning a profit and have stable cash flows.

Typically they will leverage the steady revenues or sales of a company to get even more capital for acquisitions, development of new products, marketing and sales, or to refinance a company should investors want to get their original capital back in a shorter time.

Expansion strategy

When asked about the expansion strategy, investors said that it was too early to predict what might happen. But they said growth could come through acquisition, as well as further development of the company’s newest RFID products that have a longer radio range.

Europe’s RFID market has seen some consolidation in recent years as established companies have identified opportunities for growth on the back of RFID standardisation and a maturing of the market.

They include Assa Abloy of Stockholm, Kaba Holding of Rümlang, Switzerland, and Kudelski of Cheseaux, Switzerland, who have been buying up RFID firms related to their core businesses.

Indeed, strategic buyers had been interested in Datamars. "But the private-equity investors were faster," said Zurmont Finanz’s Ernesto Maurer.

Solid base

Switzerland is home to several suppliers of components for RFID systems including EM Microelectronic, a chip-making subsidiary of the Swatch group. Another subsidiary, Omega Electronics, builds RFID readers and systems for applications in public transportation, access control, sports and secured communication.

Two years ago it acquired Sokymat IDent Component of Reichshof-Wehnrath, Germany, which makes RFID transponders for car immobilisers.

It might seem surprising that watchmaking firms are involved in RFID, but there are some strong parallels. Size is one common theme: RFID tags, especially implantable ones have to be small. Moreover they have to consume very little power.

Bulky batteries are not really wanted on a device the size of an aspirin, but at the same time they need to have some intelligence. Digital watchmakers have years of know-how in low-voltage chip designs.

Early-stage firms also eye RFID

As for start-ups in the field, there are several, all exhibiting specialisation in an application or an emerging segment of the RFID market.

Zug-based Bibliotheca RFID Library Systems, founded in 2002, makes inventory and checkout systems for libraries.

Intellion in St Gallen is a consulting company aiming to integrate RFID systems in the supply chain, a much-touted new application for RFID.

The youngest is Conthey-based Winwatch, founded just last year. It has set itself the goal of integrating RFID technology into the glass face of a wristwatch, to indicate if the watch is authentic. It is using innovative new technology from Japanese manufacturers.

In addition to counterfeit protection, Winwatch hopes that RFID transponders in watches will be used for personal identification, access control, loyalty cards and electronic payments.

Alex Kalbermatten, CEO and cofounder of Winwatch, said in a recent interview in a RFID trade journal, said: "In a couple of years, we envision joint ventures between the Swiss watch industry and other companies, such as car manufacturers."

"You might, for instance, use your Breitling watch to unlock the door of your Bentley car."

by Valerie Thompson

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