Key Takeaways
- • Veritas Capital is exploring a sale of Chromalloy that could value the aerospace aftermarket business at more than $10 billion, according to Bloomberg News citing people familiar with the matter.
- • The $10 billion figure is a potential sale value, not a bid or agreed price, and it is unclear whether it refers to enterprise or equity value.
- • Veritas could begin contacting potential buyers in the coming weeks, but deliberations are early and the firm could decide not to sell, pursue an IPO, or keep the business.
- • Likely bidders include rival aerospace companies and private equity firms; Veritas declined to comment.
- • A sale at the reported level would give Veritas a realization roughly four years after acquiring parent Sequa Corp. from Carlyle in December 2022.
Summary
Veritas Capital is exploring a sale of Chromalloy, a Palm Beach Gardens, Florida-based provider of FAA-approved replacement parts and repair and resale services for aircraft engines and industrial gas turbines, in a process that could value the business at more than $10 billion, Bloomberg News reported, citing people familiar with the matter. Veritas is working with financial advisers and could begin approaching potential buyers in the coming weeks, barring a sudden change in market conditions, the people said. Veritas declined to comment.
The deliberations are at an early stage. According to the report, Veritas could decide not to sell, take Chromalloy public or retain the business. Likely bidders include rival companies and private equity firms. The $10 billion figure describes a potential sale value rather than a bid or agreed price, and it has not been reported whether it refers to enterprise or equity value.
Veritas acquired Chromalloy's parent, Sequa Corp., from funds managed by Carlyle in a deal completed in December 2022, on undisclosed terms. Chromalloy was Sequa's only remaining business following the sale of Precoat Metals. The company competes in the engine aftermarket, the business of keeping engines operating after they are sold.
The aftermarket has become one of the most sought-after segments of aerospace for financial buyers. Resilient air travel, aging fleets and constrained new-aircraft deliveries have led airlines to keep engines flying longer, supporting steady, recurring demand for repairs and approved alternative parts. That profile, closer to a services annuity than a cyclical manufacturing business, is what allows sponsors to underwrite premium multiples and is likely to attract strategic interest.
For allocators, the process is a test of whether the exit window is open for large sponsor-owned industrial assets after a volatile stretch in equity markets. A sale at or above the reported level would give Veritas a realization roughly four years after its purchase. The fact that Veritas is keeping an IPO and holding options open suggests sponsors are still weighing several exit routes rather than committing to one.
The deliberations are at an early stage. According to the report, Veritas could decide not to sell, take Chromalloy public or retain the business. Likely bidders include rival companies and private equity firms. The $10 billion figure describes a potential sale value rather than a bid or agreed price, and it has not been reported whether it refers to enterprise or equity value.
Veritas acquired Chromalloy's parent, Sequa Corp., from funds managed by Carlyle in a deal completed in December 2022, on undisclosed terms. Chromalloy was Sequa's only remaining business following the sale of Precoat Metals. The company competes in the engine aftermarket, the business of keeping engines operating after they are sold.
The aftermarket has become one of the most sought-after segments of aerospace for financial buyers. Resilient air travel, aging fleets and constrained new-aircraft deliveries have led airlines to keep engines flying longer, supporting steady, recurring demand for repairs and approved alternative parts. That profile, closer to a services annuity than a cyclical manufacturing business, is what allows sponsors to underwrite premium multiples and is likely to attract strategic interest.
For allocators, the process is a test of whether the exit window is open for large sponsor-owned industrial assets after a volatile stretch in equity markets. A sale at or above the reported level would give Veritas a realization roughly four years after its purchase. The fact that Veritas is keeping an IPO and holding options open suggests sponsors are still weighing several exit routes rather than committing to one.
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