3i and Star Capital make 50% IRR on SR Technics

3i and Star Capital Partners have sold Swiss aircraft maintenance company SR Technics to a consortium of investors from the United Arab Emirates for €1 bn.

3i, a global private equity firm, has sold SR Technics, a Swiss aeroplane maintenance company, to three United Arab Emirates-based investors in a €1 billion ($1.27 billion) transaction.

Mubadala Development Company of Abu Dhabi, Dubai Aerospace Enterprise and Istithmar, a Dubai-based private equity firm, purchased SR Technics, with completion of the deal expected in the next two months.

Rothschild and Wyvern Partners were appointed as advisers on a dual-track process regarding a possible flotation on the Swiss stock exchange or a sale earlier this year.

3i said that it made a 4.5 times money multiple and 50 percent IRR on its original investment in the €425 million management buyout of SR Technics alongside Star Capital Partners, a London-based private equity firm. 3i held a 56 percent stake in the business, Star Capital 20 percent, with management and undisclosed minority investors each owning 12 percent.

Tony Mallin, chief executive at Star Capital, said that the sale generated similar returns to 3i and was a successful result, although not as strong as its 18 times return on the sale of Inexus, a gas transportation business, to the Challenger Infrastructure Fund for £465 million in August 2005.

Star Capital Partners invested in SR Technics from Star Capital Partners Fund I, a vintage-2001 €581 million fund, which is now fully invested. The firm closed its second fund with €800 million of commitments earlier this year.

In June 2004, 3i and Star Capital Partners backed SR Technics’ €140 million purchase of FLS Aerospace, a Danish-owned aircraft maintenance and engineering provider. In September 2005, the private equity firms carried out a €266 million refinancing from GE Aviation Services, the aviation financing unit of GE, to pay down senior and mezzanine debt from the 2002 buyout and FLS Aerospace bolt-on deal.

Zurich-based SR Technics provides component, engine and technical services for the aviation industry. The company, whose clients include Swiss, Easyjet, Cathay Pacific, Austrian Airlines and Thai Airlines, employs a workforce of over 5,000 and reported revenues in 2005 of CHF1.4 billion (€884 million) and EBITDA of CHF146 million.