Investindustrial lands 6.5x on helicopter business

The Milan-based firm sold the business alongside KKR, which netted a return of close to 2.5x.

Investindustrial and Kohlberg Kravis Roberts have agreed to sell their stakes in helicopter business Avincis for €2 billion to Babcock International Group.

The transaction is subject to approval at Babcock’s general meeting, which is scheduled on 16 April, as well as the normal regulatory clearances, according to a statement.

Mattia Caprioli, head of KKR's services sector team in Europe, told Private Equity International that the two firms had explored all exit options including an IPO, but in the end decided to sell to a strategic buyer.

“We had been in talks with them for about two years,” he said. “At the very last stage they asked for exclusive talks, as we had a lot of interest from other strategic buyers as well as private equity firms.”

For Investindustrial, the divestment of Avincis will book a return of just over 6.5x, according to a source close to the matter. The exit has yielded a 25 percent IRR for KKR and a money multiple of “close to 2.5x”, another source said.

Both KKR and Investindustrial declined to comment on returns.

Avincis is a supplier of helicopter and fixed-wing emergency services including medical, search and rescue, fire-fighting, surveillance and civil protection. It also supplies offshore crew-change helicopter services to the oil and gas industry in the North Sea and Australia. Avincis operates a fleet of around 350 aircraft and employs approximately 3,000 people.

Investindustrial acquired the business for approximately €70 million in 2005, when Avincis was headquartered in Spain. In 2010, it sold 49.9 percent to KKR. “We nearly tripled the value of the business – we bought the company in 2010 for €700 million including debt, and now the enterprise value is nearly €2.1 billion,” Caprioli said.

Under the ownership of Investindustrial and KKR, Avincis has expanded internationally. The business, which is now headquartered in the UK, has enjoyed double-digit organic revenue growth since 2005, the firms said.

“Our joint vision for the company has resulted in nine important acquisitions, allowing the company to enter new markets,” Andrea Bonomi, senior partner at Investindustrial, said in the statement.

“Our investment partnership with Investindustrial was built on the joint belief in the organic growth potential in emergency services, the unique opportunity to consolidate a fragmented industry and the resilience of the business model through infrastructure-like contracts,” Caprioli added.

KKR made the investment using its KKR Europe Fund III, a $6.79 billion 2008-vintage. Other exited or partially exited businesses from this fund include Pets at Home, which KKR listed in London earlier this month, and music rights management company BMG, which it also sold this month.

For Investindustrial, this marks the fourth exit from Fund III, a €500 million 2005-vintage, which invested in 10 businesses. It is understood the firm will return approximately €1 billion of capital to LPs this quarter, including the proceeds from Avincis. Fund III is currently valued at 2x, according to a source.

Investindustrial is currently investing its fifth fund, which reached its €1.25 billion hard-cap last March.