Cinven to sell Avio Space Propulsion to Space2, Leonardo-Finmeccanica

Cinven said Oct. 20 that it agreed to sell Avio Space Propulsion to Space2 and Leonardo-Finmeccanica. Financial terms weren’t announced. Avio Space, of Colleferro, Italy, operates space launchers and space propulsion. Cinven, along with Finmeccanica as a minority shareholder, acquired Avio Space in December 2006 from the Carlyle Group for 2.57 billion euros.

PRESS RELEASE

Cinven today announces that it has agreed the sale of Avio Space Propulsion, the leading international operator in space launchers and space propulsion, to Space2 (IT: SPA2) and Leonardo-Finmeccanica (IT: LDO) together with Avio’s management. This represents a full realisation for Cinven from its shareholding in Avio Group.

Cinven originally acquired Avio (‘Avio Group’ or ‘the Group’) from Carlyle in December 2006, alongside Finmeccanica as a minority shareholder, for €2.57 billion. At the time of the acquisition, the Group comprised both aviation and space businesses. Avio Group was a world leader in the design, manufacture and servicing of components for commercial and military jet engines, as well as the production of space launcher Vega and propulsion systems for space vehicles such as the Ariane rocket.

Avio’s aviation business (‘Avio Aviation’) was sold to GE in August 2013 for a total consideration of €3.3 billion generating around €1 billion of value for the Fourth Cinven Fund. Following the acquisition of Avio’s aeroengine business (now called Avio Aero), GE committed a further US$1 billion in investments to the Avio Aero sites over the following five years.

The new company (Avio’s Space Propulsion business), which kept the name Avio is headquartered in Colleferro, Italy and has operations across Italy, in France and in French Guyana. It employs over 800 people, 30% of whom are involved in R&D activities. In 2015, Avio Space Propulsion generated revenues of €279.2 million (2014: €224.5 million) up 24.4%.

During Cinven’s ownership, Cinven has worked closely with the Avio Group’s management team to:

  • _Position Avio’s aeroengine business to take advantage of the long-term structural growth in aviation, winning positions on some of the most promising aerospace programmes;
  • _Achieve major operational improvements through the implementation of best practices; transitioning the Group to a highly successful stand-alone business, with excellent manufacturing performance levels;
  • _Invest more than €700 million in R&D and a large number of capital expenditure programmes, including Vega, which is today recognised as the highly reliable European launcher for LEOs (Low Earth Orbits); and

 

Expand the business internationally. By working closely with the Cinven portfolio team in Asia, Cinven helped Avio aeroengine business set up two joint ventures with Xian Aero Engines and Avic Harbin Dong’an Engine – both state-controlled aerospace businesses in China. Cinven also helped Avio aeroengine business execute successful acquisitions in Brazil, the Netherlands and Poland.

Eugenio Preve, Senior Principal at Cinven, commented:

“W_h_e_n_ _C_i_n_v_e_n_ _a_c_q_u_i_r_e_d_ _A_v_i_o_ _G_r_o_u_p_,_ _i_t_ _h_a_d_ _a_ _s_t_r_o_n_g_ _d_e_f_e_n_s_i_b_l_e_ _m_a_r_k_e_t_ _p_o_s_i_t_i_o_n_ _g_i_v_e_n_ _i_t_s_ _t_e_c_h_n_o_l_o_g_i_c_a_l_ _l_e_a_d_e_r_s_h_i_p_ _i_n_ _k_e_y_ _a_r_e_a_s_,_ _l_o_n_g_-_t_e_r_m_ _c_o_n_t_r_a_c_t_s_ _a_n_d_ _d_i_v_e_r_s_i_f_i_e_d_ _b_u_s_i_n_e_s_s_._ _I_t_ _w_a_s_ _a_l_s_o_ _w_e_l_l_ _p_o_s_i_t_i_o_n_e_d_ _t_o_ _c_a_p_t_u_r_e_ _i_n_c_r_e_a_s_e_d_ _m_a_r_k_e_t_ _s_h_a_r_e_ _i_n_ _t_h_e_ _p_r_o_m_i_s_i_n_g_ _n_e_w_ _a_e_r_o_s_p_a_c_e_ _p_r_o_g_r_a_m_m_e_s_,_ _t_o_ _i_m_p_r_o_v_e_ _i_t_s_ _o_p_e_r_a_t_i_n_g_ _e_f_f_i_c_i_e_n_c_i_e_s_ _a_n_d_ _t_o_ _e_x_p_a_n_d_ _i_n_t_e_r_n_a_t_i_o_n_a_l_l_y_._” _

“A_v_i_o_ _i_s_ _a_ _g_o_o_d_ _e_x_a_m_p_l_e_ _o_f_ _a_ _s_u_c_c_e_s_s_f_u_l_ _i_n_d_u_s_t_r_i_a_l_ _i_n_v_e_s_t_m_e_n_t_ _f_o_r_ _C_i_n_v_e_n_._ _T_o_d_a_y_ _A_v_i_o_ _i_s_ _r_e_c_o_g_n_i_s_e_d_ _a_s_ _a_ _s_t_a_n_d_a_r_d_ _s_e_t_t_e_r_ _f_o_r_ _I_t_a_l_i_a_n_ _t_e_c_h_n_o_l_o_g_y_ _i_n_n_o_v_a_t_i_o_n_ _a_n_d_ _p_l_a_y_s_ _a_n_ _i_m_p_o_r_t_a_n_t_ _s_t_r_a_t_e_g_i_c_ _r_o_l_e_ _i_n_ _t_h_e_ _g_l_o_b_a_l_ _s_p_a_c_e_ _i_n_d_u_s_t_r_y_._ _W_e_ _a_r_e_ _d_e_l_i_g_h_t_e_d_ _t_h_a_t_ _S_p_a_c_e_2_ _a_n_d_ _L_e_o_n_a_r_d_o_-_F_i_n_m_e_c_c_a_n_i_c_a_ _a_r_e_ _a_c_q_u_i_r_i_n_g_ _A_v_i_o_ _a_n_d_ _w_i_l_l_ _c_o_n_t_i_n_u_e_ _t_o_ _i_n_v_e_s_t_ _i_n_ _t_h_e_ _b_u_s_i_n_e_s_s_ _a_n_d_ _i_t_s_ _l_o_n_g_-_t_e_r_m_ _g_r_o_w_t_h_._ _W_e_ _w_i_s_h_ _t_h_e_ _t_e_a_m_ _e_v_e_r_y_ _s_u_c_c_e_s_s_._” _

Giulio Ranzo, CEO of Avio, commented:

“C_i_n_v_e_n_’s_ _i_n_v_e_s_t_m_e_n_t_ _i_n_ _A_v_i_o_ _h_a_s_ _e_n_a_b_l_e_d_ _t_h_e_ _b_u_s_i_n_e_s_s_ _t_o_ _g_r_o_w_ _s_u_c_c_e_s_s_f_u_l_l_y_;_ _t_o_ _c_a_p_i_t_a_l_i_s_e_ _o_n_ _t_h_e_ _e_x_c_i_t_i_n_g_ _m_a_r_k_e_t_ _o_p_p_o_r_t_u_n_i_t_i_e_s_ _i_n_ _t_h_e_ _s_p_a_c_e_ _i_n_d_u_s_t_r_y_;_ _a_n_d_ _t_o_ _c_o_n_t_i_n_u_e_ _i_n_v_e_s_t_i_n_g_ _i_n_ _R_&_D_ _t_o_ _c_r_e_a_t_e_ _s_u_s_t_a_i_n_a_b_l_e_ _g_r_o_w_t_h_ _i_n_ _t_h_e_ _f_u_t_u_r_e_._ _W_e_ _n_o_w_ _l_o_o_k_ _f_o_r_w_a_r_d_ _t_o_ _w_o_r_k_i_n_g_ _w_i_t_h_ _S_p_a_c_e_2_,_ _a_l_o_n_g_s_i_d_e_ _F_i_n_m_e_c_c_a_n_i_c_a_,_ _a_s_ _o_u_r_ _n_e_w_ _s_h_a_r_e_h_o_l_d_e_r_,_ _a_s_ _w_e_ _e_n_t_e_r_ _o_u_r_ _n_e_x_t_ _p_h_a_s_e_ _o_f_ _g_r_o_w_t_h_._” _

The completion of the sale of Avio is subject to customary regulatory approval.

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