Carlyle-backed aviation service provider StandardAero files for US IPO

(Reuters) -StandardAero, an aircraft maintenance services provider backed by private equity firm Carlyle Group (NASDAQ:CG) and Singapore’s sovereign wealth fund GIC, filed for an initial public offering in the United States on Friday.

The aftermarket services industry is heating up with several aircraft equipment manufacturers also expanding into the space in recent years, as the business can fetch strong margins with lighter capital investment.

Additionally, since aircraft engines have a lifespan of about three to four decades, aftermarket services such as inspections, maintenance, repairs and overhauls can be a long-term source of revenue for the providers.

While some large commercial airlines maintain in-house aftermarket services divisions, smaller players outsource such operations to third parties.

StandardAero’s IPO comes as the aviation sector recovers from a COVID-19 pandemic-led slump. Expectations of an imminent interest rate cut in the United States have also encouraged some companies to list their shares.

Founded in 1911, Scottsdale, Arizona-based StandardAero provides aftermarket services to commercial and military aviation, as well as energy clients.

It has partnered with major aircraft engine makers including Rolls-Royce (OTC:RYCEY), GE Aerospace and Pratt & Whitney.

Reuters reported in April that Carlyle was weighing options for StandardAero, including a possible sale that could value it at about $10 billion.

The private equity firm acquired StandardAero from buyout firm Veritas Capital for about $5 billion in 2019.

StandardAero’s revenue jumped 12% to $2.58 billion in the six months ended June 30 from a year earlier. Its net income was $8.6 million in the same period compared with a $12.6 million loss in the first half of 2023.

J.P. Morgan and Morgan Stanley are among the underwriters for the IPO. The company is looking to list on the New York Stock Exchange under the symbol “SARO.”