Billionaire Gapontsev died without finding a successor

Billionaire Valentin Gapontsev died on October 23 at the age of 83. In what state did he leave his brainchild - the international corporation IPG Photonics?
25.10.2021
Forbes
Origin source
On Saturday, October 23, Russian billionaire, founder of IPG Photonics, Valentin Gapontsev, died. He was 82 years old. Forbes estimates the fortune of Valentin Gapontsev at $ 2.8 billion. He owned about 23% of the American IPG Photonics, one of the leaders in the world laser market. In fact, Gapontsev created the industry of powerful fiber lasers, which are used for welding, cutting, engraving and other types of work with metals. IPG's revenue has quadrupled over the past 10 years to $ 1.2 billion. How will the death of its founder affect the company?

“There is no one to whom I could transfer the case, knowing that he will be at least as good as me. Few people are ready to invest their whole life in business, otherwise they cannot, ”Gapontsev said in an interview with Forbes 10 years ago. The only son of a businessman, Denis, is not among the directors of the company.

“We are very dependent on the work of our leading employees, in particular, Dr. Valentin Gapontsev (CEO, 81 years old) and Dr. Evgeny Shcherbakov (COO, 73 years old), - in the list of possible risks in the IPG Photonics annual report for 2020, this factor was taken out a separate item. "They play a key role in setting strategic directions, developing new technologies and maintaining our culture ... The absence of one of them can hurt our business and disrupt operations."

Physicist and entrepreneur

Gapontsev came into business relatively late - at the age of 51. In Soviet times, he studied lasers at the Institute of Radio Engineering and Electronics (IRE) of the USSR Academy of Sciences in Fryazino. In 1990, Gapontsev, together with his students, founded the IRE-Polyus company. He decided to focus on the production of fiber lasers.

Lasers differ in the type of substance in which the beam is formed. Fiber lasers are more compact and economical than crystal and gas lasers, they have higher efficiency and do not require complex and expensive tuning. Before Gapontsev, fiber lasers were not widely used because they were considered low-power. Gapontsev and his collaborators managed to create powerful fiber lasers, and scientists became the owners of a truly unique technology.

In 1993, a physicist-businessman left for Germany to be closer to sales markets - in Russia in the 1990s it was difficult to monetize advanced technologies. Gapontsev's first clients were from the field of telecommunications, communication equipment. In 1993, an IPG production site appeared in the German city of Burbach, today 20% of the 6,000-strong IPG Photonics team works in Germany (35% in the USA, 29% in Russia). Gapontsev invited Evgeny Shcherbakov with him to Germany, whom he lured from the Institute of General Physics of the Academy of Sciences. Now Shcherbakov is the chief operating officer and member of the board of directors of IPG. Chief Technology Officer (CTO) of IPG Igor Samartsev has also worked with Gapontsev since the company was founded.

The business grew. In 1998, Gapontsev opened a production site in Oxford, Massachusetts, USA. The head office of IPG Photonics is also located there today. In 2006, during the IPO on the Nasdaq, the company raised about $ 90 million. Today, the market capitalization of IPG is $ 8.67 billion.

Gapontsev expanded sales markets by using fiber lasers in automated industrial welding. The first major customer was Volkswagen, for which IPG lasers welded body parts of 200,000 vehicles in 2011.

Each year, IPG Photonics spends at least $ 120 million on research and development. The company has learned to produce devices with a capacity of up to 10 kW or more, which are in demand in metalworking, the production of semiconductors and solar cells.

Rusnano invested in one of the subsidiaries of IPG Photonics, having bought IRE-Polyus in 2010 for $ 45 million. According to the state corporation itself, due to its investments, Gapontsev's company increased its production capacity in Russia (Fryazino) by five times, having built new buildings with an area of ​​45,000 square meters. In 2012, Rusnano withdrew from the project, selling its stake for $ 55 million. After that, Gapontsev and the companies affiliated with him remained the largest shareholder; in total, individual owners own 33.35% of IPG shares, the rest belongs to numerous investor funds.

In 2018, IPG Photonics acquired its longtime client, the American company Genesis Systems Group, a market leader in robotic laser welding serving transportation, aerospace and other industries. The deal amounted to $ 115 million.

The pandemic could not but affect business. In 2019, IPG sales were at $ 1.46 billion, in 2020 - they decreased to $ 1.2 billion.

No competitors

On August 2, 2021, IPG Photonics published a two-quarter report. In one day, the company's capitalization decreased by 17%, although there was nothing catastrophic in the reporting. Revenue in the second quarter of 2021 was slightly below analysts' expectations ($ 372 million versus $ 377 million), but increased by 25% over the same period last year. Sales in the key market, China, grew by 10%, in Europe - by 50%, in the USA - by 23%.

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