Zurich-based SR Technics, the leading independent provider of technical services in the aircraft, component and engine areas, is to be acquired by a consortium of three investors from the United Arab Emirates with a strategic investment interest in the aerospace industry. The new owners’ consortium is made up of Mubadala Development, Dubai Aerospace Enterprise (DAE) and Istithmar. The transaction value is CHF 1.6 bn.

The new owners support the successful international growth strategy pursued by SR Technics under the ownership of 3i and Star Capital since 2002. They will stimulate further growth for the company by providing expanded access to new capital and to the fast-growing aerospace markets of the Middle East and the Asia/Pacific region. SR Technics will remain a stand-alone independent corporate entity led by the current CEO Hans Lerch and his management team. The company’s headquarters will continue to be at Zurich Airport and its present facilities and work force of approximately 5 000 employees will be retained.

The consortium is based in the fast-growing economic region of the United Arab Emirates. It has a strategic investment interest in the aerospace industry and sees the acquisition of SR Technics as a long-term commitment. The consortium will hold a majority stake of more than 90% of SR Technics, with Mubadala Development owning 40% of the consortium’s stake and both DAE and Istithmar holding 30% of that stake. The remaining shares will be retained by the management of SR Technics. The Share Purchase Agreement was signed in Zurich on Wednesday. The transaction is subject to standard regulatory approvals and is expected to be finalised within two months.

“The long-term strategic investment interest of the buyers, their considerable financial means and their excellent contacts make this transaction the best strategic option for SR Technics,” commented Frank Turner, who remains Chairman of SR Technics’ Board of Directors. “The consortium recognises SR Technics as a leader in the industry and sees tremendous growth potential for our company throughout the world.”

Growth to be continued from existing facilities

The consortium plans to reinforce the current successful strategy of SR Technics with the support of Chief Executive Officer (CEO) Hans Lerch, his management team and the company’s 5 000 employees. Current facilities will be maintained and no redundancies or job transfers are planned. “This investment is all about building SR Technics’ business,” said Waleed Al Mokarrab Al Muhairi, Chief Operating Officer of Mubadala Development. “Our consortium wants to further grow the company based on its current strengths - including its highly-reputed brand name and its skilled and motivated workforce. We count on all employees’ support in pursuing our objective of strengthening the business still further.”

“This is a great deal for all involved because it will help fulfil the potential of this business,” said Bob Johnson, CEO of DAE. “We intend to expand SR Technics’ global reach and diversification. In particular, our consortium and the management of the company see great opportunities to build the brand in the Middle East and the Asia/Pacific regions - the high-growth markets into which SR Technics has diversified in the past. Additionally, SR Technics will continue to grow its strong present market position in Europe.”

Elaborating further on the growth strategy, David Jackson, CEO at Istithmar, added: “The consortium identified SR Technics as one of the most dynamic and high-potential assets in the aerospace industry. We are excited to be a part of the consortium, which firmly supports SR Technics’ management in taking forward the growth strategy aimed at unlocking its immense value. Our consortium will retain SR Technics as an independent stand-alone business entity, which has been the key reason for its success in the past four years.”

Management committed to new ownership

SR Technics’ management is fully committed to the new ownership structure and the opportunities it presents for the continued growth of the business and will remain invested in the company alongside the consortium.

“We have achieved impressive development under 3i and Star Capital over the past four years and our new owners will reinforce the positioning of SR Technics as a globally-successful provider of integrated airline, component and engine services,” commented Hans Lerch, President and CEO of SR Technics. “This is a unique opportunity to accelerate our growth strategy supported by ambitious new owners with a strong strategic interest in our industry, excellent contacts within the fast-growing markets of the Middle East and Asia and a long-term commitment to our company and its customers.”

The new Board of Directors of SR Technics will continue to be chaired by Frank Turner. The full board’s composition will be announced after closing.

An international growth strategy since 2002

SR Technics had been owned by private-equity investors 3i (56%) and Star Capital (20%), SR Technics’ management (12%) and other institutional investors since 2002. These owners successfully positioned the company - a subsidiary of the former Swiss national airline Swissair until its demise in 2001 - as one of the world’s leading independent providers of integrated aircraft, component and engine solutions and initiated an international growth strategy. In 2004, SR Technics acquired and integrated its competitor FLS Aerospace, based at London-Stansted and Dublin. Recently, it acquired the business of Sifco Turbine Components of Cork, Ireland to strengthen its engine repair business. In the past four years, the company has also signed numerous new customer contracts and partnerships in Europe, Asia and the Middle East.

Since becoming independent, SR Technics has built a diversified business base with a decreased reliance on Swiss. Today, SR Technics’ business is based on a broad global customer portfolio, which includes Swiss, EasyJet, Cathay Pacific Airways, Aer Lingus, Austrian Airlines and Thai Airlines as its largest customers and numerous other airlines such as Hong Kong’s Dragonair and Middle Eastern carriers Gulf Air and Sama Airlines.

“This is the logical next step in the continuation of SR Technics’ success story,” commented Dr. Stephan Krümmer, Managing Director of 3i Germany, on behalf of the outgoing owners. “We are proud of what we have achieved with SR Technics and wish the company much success in the future.”