Permira Funds has finalized its acquisition of Jet Aviation
after gaining antitrust clearance. Rumor has it that Permira paid around $545
million for Jet, but both it and outgoing owners the Hirschmann family are
sworn to secrecy over the deal's value.
Show News first broke the news that Jet Aviation was for
sale at the EBACE Convention at Geneva in May 2002. Now the big question is,
who is Permira, and where is it taking Jet Aviation?
Permira Funds is the former, and much respected, Schroder
Investment Bank. The company is a major independent European private equity
specialist, owned and controlled by its 30 partners. It has bases in Frankfurt,
London, Madrid, Milan, New York, Paris and Stockholm, plus a Tokyo office that
was opened earlier this year. Interestingly, Permira is often referred to by
the German press as a UK company because its largest office is in London. Its
investor base is comprised principally of public and corporate pension funds
and other institutions. Around 90 professionals advise Permira Funds, which has
a total committed capital of $13.23 billion.
Where is Jet Aviation going under the new ownership? It's
going to get a lot bigger and become a global player, according to Permira.
"Jet Aviation has a very good presence in Europe and a good foothold in the
U.S., but we want to grow much stronger in the U.S.," said Dr. Jsrg
RockenhSuser, a Permira principal investment manager based in Frankfurt. "To
attain this goal can be done either through organic growth or by selective
follow-on acquisitions.
"Our challenge now is to transform Jet from being a great
family-owned company to one ready for the public markets. We think we should go
for a better, more balanced mix of businesses in the U.S., which will take two
to three years to grow. It also depends on the speed at which we can develop
the company, but we are happy if it takes five years for the Initial Public
Offering window to appear," he told Show News.
RockenhSuser said that Permira had first looked at the
company back in 2001/02, and that Jet's strength lay in its diversity. "Jet's
circle of benefits is working, and despite the external shocks of the Iraq war
and 9/11, the company has remained stable. At the moment it is a well-balanced
business and we have no intention of selling any part of it," he disclosed.
"We have considered both organic and acquisitions options.
Our overall view is that we would like to expand the U.S. business to equal
that in Europe. This means that we would like to acquire $500 million to $600
million or more in turnover, which may mean a big acquisition."
For Jet to expand quickly in the U.S., it would need to take
over either Signature Flight Support or the Carlyle Group's Garrett/ Piedmont
Hawthorne/Associated amalgam.
Said RockenhSuser, "There are a lot of interesting targets
in the U.S., and the Carlyle Group owns some of them—but we haven't yet talked
to Carlyle." He noted that Jet's MRO business remains the backbone and core of
the company and needs to be grown further. "We hope to grow the MRO business in
Europe as well."
Asked about interior completions expansion, RockenhSuser
said this business was growing again after the problems that the whole industry
had experienced over the last two to three years, and it was now in very good
shape. He stressed, "It is a more volatile business. You can't plan completions
to the same level of detail as MRO work. Scale is very important in this
business."
Heinz Kshli, CEO of the Jet Aviation Group, said, "The
acquisition by Permira will put the company on track toward a faster global
expansion, which is very important in an industry that is growth-driven."
