Aviation services provider StandardAero, backed by buyout firm Carlyle Group and Singapore’s sovereign wealth fund GIC, said on Monday it was targeting a valuation of up to $7.54 billion in its initial public offering in the United States.
The Scottsdale, Arizona-based company is seeking proceeds of up to $1.07 billion through a sale of 46.5 million shares priced between $20 and $23 each.
StandardAero offers aftermarket services – inspections, maintenance, repairs and overhauls – for aerospace engines.
The business can yield strong margins with relatively lighter capital investment, according to a McKinsey & Co report. It can be a source of long-term revenue since aircraft engines have a lifespan of about three to four decades.
Several aircraft equipment manufacturers have expanded into the industry in recent years, while some large commercial airlines also maintain in-house aftermarket services divisions.
The IPO comes as the aviation sector recovers from a COVID-19 pandemic-led slump. Confidence in the Federal Reserve’s ability to guide the economy to a soft landing has also boosted equities.
“For the IPO market, we’re entering the Goldilocks zone for the next few quarters, if not the next few years,” said Jay Bala, CEO of investment firm AIP Asset Management.
“I think we’re in the first year of a five-year bull run. That tends to be a very positive force for companies going public.”
StandardAero, founded in 1911, countscarriers such as American Airlines AAL.O and Southwest Airlines LUV.N as well as aircraft engine makers such as Rolls-Royce RR.L, GE Aerospace GE.Nand Pratt & Whitney among its customers.
Reuters reported in April that Carlyle was weighing options for the company, including a possible sale that could value it at about $10 billion. The buyout firm bought StandardAero from Veritas Capital for about $5 billion in 2019.
Funds and accounts managed by Blackrock BLK.N, Janus Henderson Investors and Norges Bank Investment Management have separately indicated an interest in purchasing up to $275 million of shares on offer in the IPO, StandardAero said.
J.P. Morgan and Morgan Stanley are the lead underwriters for the IPO. StandardAero is looking to list on the New York Stock Exchange under the symbol “SARO.”
