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CAI Private Equity in 3.7x aerospace exit

The North America-focused firm has sold aerospace company TurboCombustor Technology.

CAI Private Equity has sold engine component company TurboCombustor Technology.

CAI declined to disclose financial terms of the transaction, but a source familiar with the matter said the firm generated a 3.7x return multiple and 18.4 percent IRR on the investment. CAI purchased a majority stake in TurboCombustor in 2004 alongside AeroEquity, which continues to own a stake in the company. CAI invested in TurboCombustor from its $195 million second fund that closed in 1999. The firm’s third fund collected $375 million in 2003.

“We have three other [aerospace] investments, and we’re actively looking for other deals in this space,” CAI managing director Dale Tingley told Private Equity International.  “Right now we’re much more active in aerospace and defense, healthcare services and energy and utility services.”

CAI aims to invest between $20 million and $75 million per transaction across a variety of sectors.

“We’re starting to narrow our focus, but still fall in the generalist bucket,” Tingley said.

The firm has a North American investment mandate and is a frequent investor in Canadian businesses.

“There hasn’t been as much activity on a per capita basis in Canada as in the US,” Tingley said. “A lot of that is probably dependent on many Canadian entrepreneurs demonstrating a preference to put one more year of growth behind them before they launch a sale process.”

Tingley, who said he remains optimistic on the Canadian private equity market, added that he was “much more optimistic” on the prospects in Western Canada, which holds the majority of the country’s natural resource-related opportunities.

CAI closed its fourth fund on $175 million in August 2010, and used Ariane Capital Partners as its placement agent.