Aviation MRO leader StandardAero seeks $1bn through IPO, backed by Carlyle Group

StandardAero, a prominent aircraft maintenance services provider backed by private equity firm Carlyle Group and Singapore’s sovereign wealth fund GIC, has filed for an initial public offering (IPO) in the United States. The Scottsdale, Arizona-based company, known for its comprehensive aerospace engine aftermarket services, filed with the Securities and Exchange Commission (SEC) on September 6, 2024, with an estimated IPO size of $1 billion.

Key Details of StandardAero’s IPO Filing

StandardAero plans to list on the New York Stock Exchange under the ticker symbol “SARO.” While the initial filing mentions raising $100 million, it is considered a placeholder figure. Analysts speculate that the actual IPO size could be closer to $1 billion, given the company’s significant market position and revenue performance. The company has selected a consortium of major underwriters for the IPO, including J.P. Morgan, Morgan Stanley, BofA Securities, UBS Investment Bank, Jefferies, RBC Capital Markets, Carlyle, CIBC World Markets, HSBC, Mizuho Securities, Nomura Securities, and Societe Generale.

Strong Financial Performance Amid Industry Growth

StandardAero’s decision to go public comes amidst a period of recovery and growth in the aviation sector, which is emerging from the downturn caused by the COVID-19 pandemic. The company reported a 12% increase in revenue to $2.58 billion for the six months ending June 30, 2024, compared to the same period a year earlier. During this period, the company also turned a profit, posting a net income of $8.6 million compared to a loss of $12.6 million in the first half of 2023. These improved financials highlight StandardAero’s resilience and strategic positioning in the highly lucrative aftermarket services industry, which involves maintenance, repair, and overhaul (MRO) services for aircraft engines and components.

Strategic Partnerships and Market Positioning

Founded in 1911, StandardAero has established itself as a leading independent provider of MRO services for both fixed and rotary-wing aircraft across commercial, military, and business aviation sectors. The company has built strong relationships with major engine manufacturers, including Rolls-Royce, GE Aerospace, and Pratt & Whitney, allowing it to cater to a broad range of clients and enhance its service offerings. The long lifecycle of aircraft engines—typically three to four decades—ensures steady demand for aftermarket services, making this sector highly attractive for investors.

Market Dynamics and Future Prospects

The aftermarket services market is heating up as aircraft equipment manufacturers and other players expand their footprint in this space, which offers robust margins with relatively lower capital investment compared to new aircraft manufacturing. The IPO filing aligns with current market trends and a possible interest rate cut in the United States, encouraging companies to tap into public markets for capital.

Additionally, reports suggest that Carlyle Group had been exploring strategic options for StandardAero earlier this year, including a potential sale that could value the company at approximately $10 billion. Carlyle acquired StandardAero from Veritas Capital for around $5 billion in 2019. This IPO could be a move to optimize returns and capitalize on the favorable market conditions.

StandardAero’s move to go public is a strategic decision that highlights its growth trajectory and the broader recovery within the aviation sector. The IPO could provide StandardAero with the capital needed to expand its market presence and further enhance its MRO capabilities. As the aviation industry continues to rebound, the company’s public debut will be closely watched by investors and industry stakeholders alike.