Carlyle-backed StandardAero targets $7.5 billion valuation in US IPO

(Reuters) -Aviation services provider StandardAero, backed by buyout firm Carlyle Group (NASDAQ:CG) 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.

Founded in 1911, StandardAero has partnerships 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 Veritas Capital for about $5 billion in 2019.

Funds and accounts managed by Blackrock (NYSE:BLK), 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.”