The French defense technology giant Exail Technologies is emerging as one of the most prominent beneficiaries of the current global military expansion wave. Confronted with the threat of a joint US-Israeli incursion, Iran's warnings about mining the Strait of Hormuz have rapidly brought this French company, specializing in underwater drones, into the procurement focus of various navies. Its stock price has surged by over 700% since mid-2024.
The escalating situation has directly catalyzed market enthusiasm for Exail, with the company's shares hitting a record high last week. Exail's CEO, Raphaël Gorgé, stated that the company is continuously receiving capability assessments and procurement inquiries from multiple parties, noting, "If I had 12 systems available for immediate delivery right now, finding buyers would not be difficult."
As the market value of the approximately 41% stake in Exail held by the Gorgé family has soared, the family's net worth has risen to approximately $1 billion, earning them a place on the Bloomberg Billionaires Index. This week, the family's holding company capitalized on the momentum, selling shares worth 75.6 million euros.
The Hormuz crisis has ignited procurement demand. Exail's core product is a top-tier mine-hunting drone system, with a unit cost of around 500 million euros (approximately $580 million) and a delivery lead time of 18 months. The system utilizes an unmanned surface vessel that deploys a fleet of underwater drones to autonomously detect and destroy mines within a minefield. The Belgian and Dutch navies were the first to procure this system in 2019, with a joint order comprising over 1,000 drones.
Even before Iran's mining threats, Exail had been accumulating orders. According to Gorgé, the United Arab Emirates—which has been under sustained pressure from Iranian threats—placed an order with Exail over a year ago. The significant climb in the company's share price, however, truly began with a 400-million-euro order for mine-hunting drones from an unnamed navy early last year.
Exail's competitors in the underwater drone sector include larger groups such as France's Thales SA, Sweden's Saab AB, and Norway's Kongsberg Gruppen ASA.
Exail's rise reflects deeper transformations within the European defense industry. Following Russia's invasion of Ukraine in 2022, European nations began substantially increasing defense spending, highlighting the need for mine-clearing operations in the Black Sea. Concurrently, doubts about the longevity of US security commitments are driving Europe to invest more in autonomous defense capabilities.
Jean-Francois Delcaire, a fund manager at Paris-based asset management firm HMG Finance, commented, "Global rearmament is a major trend, already reflected in significantly rising stock prices, which indicates solid future prospects. However, there are execution risks associated with defense contracts, and their fulfillment takes time."
So far this year, three defense contractors in Europe have completed initial public offerings, and the Franco-German tank manufacturer KNDS NV is preparing for a large-scale IPO. Exail's market capitalization, which had long remained below 500 million euros, surpassed 2.5 billion euros this month.
The company's technological foundation was built through acquisitions and integration. Exail's technological accumulation was not achieved overnight. Raphaël Gorgé joined the family business in 2004 and spearheaded the company's most significant strategic acquisition to date: the 410-million-euro purchase of civilian marine drone manufacturer iXblue in 2022. This entity was merged with the group's existing military marine robotics business, with part of the acquisition funding provided by British private equity firm ICG Plc.
This strategic bet has yielded significant results. Following the merger, Exail Group's profits nearly doubled, driven by demand for sonar and anti-jamming navigation systems, leading to a substantial jump in its order backlog.
The family's business interests continue to expand. The company was founded in 1988 by Jean-Pierre Gorgé, Raphaël's father and the family patriarch. This month, another company under their control completed a financing round of approximately 100 million euros dedicated to the research, development, and design of small modular nuclear reactors.
Despite the recent pullback in share price to around 129 euros this week, Exail's current price-to-earnings ratio remains at about 71 times expected earnings, more than double its average valuation over the past decade.
François Dossou, Head of Equities at Sienna Gestion, pointed out that the company still needs to deliver on its existing order backlog, stating, "They have the technical capability, but for a company of this size, execution risk cannot be ruled out."
Gorgé remains optimistic about the future. He anticipates that the order book "will fill up faster and more strongly in the coming months and over the next five to ten years." He believes the nature of modern warfare is changing, with clients increasingly recognizing that a combination of four frigates paired with 200 drones offers better cost-effectiveness than six frigates alone, especially since drones can be delivered within 18 months, compared to the five or six years required for traditional equipment.