Futura (Spain) - Nov 2007

unquote
01 November 2007

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After a holding period of five years, Corpfin Capital has sold its 67% stake in charter airline Futura International Airways. The sale to UK-based private equity firm Hutton Collins, the management team and employees of Futura, is valued at around €70m in equity. Sector player Aer Lingus, until then holding 20% of the company, has also exited its stake. The management has reinvested the majority of the proceeds received with the sale. Rumour has it that Corpfin has made an IRR close to 50% and a multiple that surpasses 5x, making it one of the most successful investments for the Spanish house to date. The investors had realised some of the value prior to the exit via “relevant dividends” taken during the course of the investment. The divestment follows a limited auction process managed by Atlas Capital and Seabury, a US-based investment bank specialised in the aviation sector. The competition is said to have involved both domestic and international private equity players. Hutton Collins eventually won the auction as it offered a reasonable amount to the sellers, while allowing the managers and employees to jointly own the majority stake. “The management has done an excellent job in the past few years, so we thought it was fair to select the proposal rewarding that aspect of the business,” said Natividad Sierra, investment director at Corpfin. The entry of Hutton Collins will aim to give the company the necessary stability to embark on the growth plans led by Roman Pané, CEO of Futura, who will retain his position. “With Corpfin, we transformed a worn-out business model into an original and brave one. The doubts and uncertainties surrounding us at the beginning have by now evolved into increased self confidence,” says Pane.

Deal history

Corpfin’s stake in charter airline Futura was acquired in November 2002, for an enterprise value of €35m. Under the guidance of the private equity firm, the company improved its working capital management, increased its fleet by nearly threefold and introduced new services such as wet leases or aircraft rental to other airlines. During that period, the company has also set up operations in the US and managed to secure a steady workflow to balance slowdowns during the European summer. By the time of the acquisition, the company’s turnover was €225m, with an EBITDA of slightly over €4m. The current figures are E350m in turnover with EBITDA of €15m. Approximately half of the company’s current revenues are originated by new activities, in particular the Wet Lease Business, operation of aircrafts in the US, cargo airline Flyant and advisory services to other airlines in areas such as aircraft maintenance. The cargo business, started in 2006, has been described by the seller as a key part of the company’s activities going forward. It is anticipated that Hutton Collins will expand that side of the business as well as expanding the company’s operations worldwide. “Europe has become small for us,” adds Pané. Futura is based in Palma de Mallorca, was founded in 1989. It is the largest independent medium-haul charter airline in Europe, with a workforce of more than 1,000 staff and a fleet of more than 30 Boeing 737, mostly new generation.

People

The investment and exit of Futura were managed by Patrick Gandarias and Natividad Sierra of Corpfin Capital.

Sourced from: Southern Europe unquote" 70 (Jan 2008)