Carlyle Contract Aviation win

The final conclusion of the deal has yet to be confirmed.

Carlyle’s initial bid was launched as Australian IPO exits stalled from the end of 2009, as two private equity-backed IPOs – TPG Capital investee Myer and Goldman Sachs JBWere/Quadrant Private Equity portfolio business Kathmandu Holdings – both saw relatively disappointing performance on listing. With Australia’s public markets still impacted by the European debt crisis into mid-year 2010, Contract Aviation’s owners appear to have made the right decision, though institutional investors tapped for the planned IPO were apparently disgruntled at the outcome, with some objecting that they had served as stalking-horses for the higher private equity bid.

The IPO had valued the company at approximately A$300 million ($250 million). Contract Aviation’s business units serve chiefly the government, military and resources sectors.

AVCJ sources report that Australia is still regarded as the best single venue for buyout transactions across the region, partly because it is one of the least problematic in terms of majority control and execution. Sources also underline that corporate plays exposed indirectly to Australia’s booming resources sector are favored options for private equity investors, as their financial characteristics are usually more supportive of leveraged transactions than the capital-intensive, slow-returning resources and mining projects themselves.

Contract Aviation was formed from the merger of Brisbane-based charter airline Alliance Airlines and Auckland-based New Zealand air freight and helicopter charter group Airwork, both backed by Antipodean independent investor Hugh Jones.

Airwork originally offered cross-Straits and local Australian services in a JV with leading Australian logistics player Toll Holdings, with substantial charter business with Australian mining and government concerns. Jones has owned the business since 1984.

Alliance was formed in 2002 when Brisbane-based Queensland Airline Holdings bought the assets of defunct Flight West Airlines. Alliance runs several scheduled services out of Perth and Adelaide in support of BHP Billiton mining projects.

WilsonHTM and Commonwealth Bank acted as Contract Aviation’s financial advisors, with Deutsche Bank providing leverage finance to Carlyle. A Carlyle spokesperson declined to comment on the deal.

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• Topics
• Australasia
• Infrastructure
• Infrastructure
• Buyouts
• Goldman Sachs
• TPG Capital
• The Carlyle Group
• Quadrant Private Equity