NEW YORK, (Reuters) – Dubai Aerospace Enterprise has put aviation services company StandardAero on the auction block and retained Deutsche Bank to advise on the sale, people familiar with the matter said on Friday.
State-owned DAE has opted to entertain offers for part or all of StandardAero – which it bought from private equity firm Carlyle Group [CYL.UL] in 2007 – after several potential strategic and financial buyers expressed interest, two sources said.
The auction, which started several months ago, represents part of the Gulf Arab emirate’s efforts to dig itself out of a $100 billion-plus debt pile by selling its tightly controlled companies.
In 2007, DAE bought aviation services providers Standard Aero and Landmark Aviation from Carlyle for $1.9 billion and merged the two companies in 2008 under the StandardAero brand. The merged firm subsequently divested its airport services operations for $435 million.
It is unclear if Dubai would make a profit on the 2007 investment because the aerospace aftermarket has only started to recover recently after a deep slump that lasted years, the sources said.
The auction process has moved slowly, partly because Dubai contemplated ways to retain a stake in StandardAero to take advantage of an anticipated pickup in the commercial aerospace market over the next couple of years, one of the sources said.
“It’s not clear what DAE exactly wants. The issue is that they need cash, but they also believe very much in the future of StandardAero,” that source said.
“So they were trying to look for a way where they would sell the firm now but retain some type of a stake in it so they can capture some of the upside in the next several years,” the source said.
Both sources asked not to be identified because the auction is not public. Representatives for DAE could not be immediately reached for comment, and Deutsche Bank declined to comment.
Dubai, a regional financial and trade hub, established DAE in February 2006. Through several acquisitions, the company has grown into a global aerospace giant with operations ranging from aircraft leasing to manufacturing to engineering.
StandardAero provides engine maintenance, repair and overhaul, and nose-to-tail services that include airframe, interior refurbishments and paint for commercial and military aircraft.
StandardAero, which posted 2009 sales of roughly $1.4 billion, employees nearly 4,000 worldwide and has primary facilities in the United States, Canada, Europe, Singapore and Australia.
Its predecessor Standard Aero was founded in 1911.