Cinven sells Avio aviation unit to GE for €3.3bn

Amy King
02 January 2013

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Cinven has sold the aviation business unit of Avio to General Electric for €3.3bn.

The GP has seen a return of 2x its original investment, according to reports, in an exit route favoured over the public offering the investor had initially considered, before rejecting it due to market volatility. The sale generated a return of around €1bn for the fourth Cinven Fund.

The unit designs, manufactures and services components for commercial and military jet engines. Avio's space unit will remain under the ownership of BCV Investments, a holding company owned by Cinven and industrial group Finmeccanica.

Previous funding
Cinven purchased Avio from private equity giant Carlyle Group and Italian defence group Finmeccanica through BCV Investments in one of the largest Italian buyouts in 2006. The deal was worth €2.57bn and saw Cinven acquire an 81% stake. Finmeccanica's 30% stake was sold for €430m, but the group bought back a 15% shareholding for a reported €150m.

Company
Founded in 1908 and based in Turin, Avio operates in the aerospace sector across four continents and employs around 5,300 people. The firm designs, develops and manufactures aerospace propulsion components and systems for both for civil and military aircraft. In 2011, the firm generated revenues in excess of €2bn, representing a 15.6% increase on the previous year. EBITDA reached €383m that year, a 13.3% increase on the previous year.

Since the buyout of the firm in 2006, the company has increased revenues by 66% and EBITDA by 50%.

People
Roberto Italia is a partner at Cinven. David Joyce is president and CEO of GE Aviation.

Advisers
Vendor (BCV Investments) - Deloitte, Chris Diricks (Tax); K Studio Associato, Giuseppe Moretti (Tax); KPMG, Paolo Mascaretti (Financial due diligence).
Buyer - DLA Piper (Legal).
Management - Freshfields, David Sonter, Adrian Maguire (Legal); JP Morgan, Larry Slaughter (Corporate finance); Rothschild, Nicola Paini, Nicolas Bonnault (Corporate finance).