Signature on the line for a record year
Signature Flight Support's FBO at Changi International Airport in Singapore.
The bidding war for FBO company Signature Aviation means that 2021 is set to be a record year for business aviation acquisitions. The last time we saw more than $3bn in deals was when Onex and Goldman Sachs bought Hawker Beechcraft in 2006. Let’s forget about that for now.
We have already seen three deals announced: last week Wheels Up bought Mountain Aviation; on Wednesday, Global Infrastructure Partners (GIP) bid $3.6bn for FBO chain Signature Aviation which is listed on the London Stock Exchange; and, today, Gama Aviation paid more than $8m in cash for maintenance company Jet East Aviation.
Global Investment Partners is a $54bn infrastructure fund which owns a mix of assets including London City Airport, Edinburgh Airport and London Gatwick Airport. Its bid of 405p a share has beaten a December offer of 381p from Blackstone, the private equity firm – which was 40% above the share price the day before.
“As an experienced, long term infrastructure investor with a strong operational focus, we believe that we are the ideal partner for Signature going forward,” said Adebayo Ogunlesi, the chairman and managing partner of GIP. “We plan to put customer service, operational consistency and growth at the heart of our strategy supported by plans to continue to improve employee engagement and through targeted investment,” he said.
Signature announced a partnership with Neste and NetJets to supply Sustainable Aviation Fuel in September 2020. Ogunlesi has made it clear that GIP supports this. “We believe that Signature can innovate and evolve as both it, and the aviation industry more generally, delivers on their commitments to climate change.”
The interest in Signature is not a surprise. In November the company sold Ontic, a parts company, for $1.36bn to private equity company CVC. This and other disposals, meant that it was now a pure-play FBO company and more attractive to infrastructure investors (although it is still selling an engine business). Australia’s Macquarie Infrastructure Partners owns competitor Atlantic Aviation.
With shares at 430p today, some investors clearly feel there could be another offer to come. Cascade Investment, Bill Gates’ wealth manager, owns 19% of Signature and has said that it is keen to work with Blackstone. Carlyle, a private equity rival of Blackstone, has also expressed an interest in Signature. Sir Nigel Rudd, Signature’s chair, has run listed company auctions before and GIP may need to raise its offer.
“For the avoidance of doubt, nothing precludes either Blackstone and Cascade or Carlyle from making an offer proposal that the board of Signature Aviation will consider,” said Signature this week.
Gama buys Jet East Aviation
Gama’s acquisition of Jet East Aviation is clearly on a different scale. But it makes a lot of sense to the UK listed company.
With bases in New York, Boston, Philadelphia, Cleveland and Cincinnati, Jet East has little overlap with Gama’s existing US maintenance business and grows Gama’s US maintenance business by about 40%.
“It allows us to grow our capabilities with an almost unrivalled footprint in the US,” Marwan Khalek, chief executive of Gama Aviation told Corporate Jet Investor. “It is a great fit, a great business and with great people.”
Branded Jet East, the combined company will have 10 scheduled maintenance bases and more than 90 mobile technicians covering 65 cities.
“The footprint we have is important,” said Steve Maiden, CEO and President of Jet East to CJI. “We already have the sticks of the house in place, good customers and just need to fill it with more.”
Maiden was appointed CEO in March 2020. Before joining Jet East he was President of Directional Aviation’s Constant Aviation for 13 years. Constant grew significantly during this time.
The sale was close to being signed in March 2020 but was delayed by Covid-19. In fact, Gama Aviation used funds from its – and Signature’s – sales of Gama Aviation Signature to Wheels Up on March 2nd, 2020.
Wheels Up has kept buying. Its acquisition of Mountain Aviation – the ninth largest US charter operator by flight hours – added 59 aircraft to its fleet last week.
With Signature, the listing of helicopter taxi company Blade by a Special Purpose Acquisition Company and maybe another flotation, 2021 already looks set to be a record year. And we are only 15 days in.
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