September 25, 2019 Update

Private Equity’s Aftermarket Spree Continues…

The KAL Capital team advised STS Aviation Group on their equity partnership with Greenbriar Equity Group and following the transaction the STS and Greenbriar team has made two additional acquisitions. Earlier this week, STS Aviation Group announced the acquisition of Apple Aviation, a limited powerplant and airframe repair station focused on line and base maintenance for Boeing and Airbus aircraft. UK-based, Apple Aviation specializes in engine overhauls, AOG support, aircraft storage, teardown, and recycling and parts processing. Prior to the acquisition of Apple Aviation, STS acquired Triumph Aviation’s NAAS line maintenance division – now called Tank Tigers – a provider of fuel systems maintenance, leak detection and bladder cell repair services. KAL Capital served as the sell-side investment banking advisor on this transaction as well.

UK-based aftermarket activity has been hot as of recent. In addition to the Apple Aviation deal, AerFin was also acquired by Denmark-based CataCap. AerFin focuses on end-of-life aircraft and engine lease and sales. CataCap purchased the business from another private equity fund, CarVal Investors.

The primary themes of these transactions are international footprint growth, and complete, full-service component supply chain solutions. One step further, it’s easy to see the private equity platform surge. Private equity’s investment interest has made it a lot trickier for new players seeking target deals in the space, i.e. without paying a higher price. Strategic initiatives from blue-chip aftermarket businesses are competing head-to-head with private equity investment interest. This is consequently driving the purchase price higher and higher for standalone repair stations that would promote strong synergies. While aftermarket sentiment becomes more optimistic due to air passenger increases, certification/regulation barriers to entry, and an all-time-high backlog of new aircraft entering the sky, the transaction announcements are expected to continue to be regular headliners.