Emirates buy more transport assets
Newly-created Dubai Aerospace Enterprises (DAE), leading a consortium with other Gulf-States financial entities, announced it would take over Swiss-based SR Technics, the world's #1 independent provider of aircraft maintenance and repair services. The deal, for €1 billion ($1.3 billion), is with SR Technics's owners, a consortium of private equity firms led by 3i and Star Capital.
SR Technics is a spill-off from the 2001 bankruptcy of Swissair. For those keeping score for private equity profit, 3i and Star Capital snapped up the distressed properties in 2002 for €425 million. That's a 100% run-up over four years. It must be said that the new management has been active in expanding the company, which now serves such carriers as Swiss, EasyJet, Cathay Pacific Airways, Aer Lingus, Austrian Airlines and Thai Airlines. In recent years, SR Technics acquired competitor FLS Aerospace, based in London (for around $60 million) and Sifco Turbine Components of Ireland, an engine repair business (for around $10 million).
The company will operate as a standalone entity in Zurich, with the same management.
Last February, the Dubai government (which owns DAE) said that it planned to invest $15 billion in aviation services and manufacturing. The aviation sector has been identified as a key growth area for investment by the Gulf States, which have enormous oil revenues to invest.
The move follows the 2005 acquisition by Dubai International Capital of UK firm Doncasters, an engineering group supplying components supplier to aircraft and jet-engine makers, That deal was also for about €1 billion. DAE is also about to open DAE University, the first high-end aerospace training school in the Middle East.
Other areas that Dubai and Abu Dhabi investors, are interested in include airport development, airplane leasing and assembly, according to a Financial Times article ("Dubai in €1bn Swiss aerospace deal", 9/7/96). Mubadala Development, an investment firm owned by the government of Abu Dhabi and a member of the DAE consortium , was also a member of a consortium that attempted to buy British airport operator,
The airplane initiative combined with the world expansion of Dubai Ports show the global reach of Gulf States oil wealth. It also, given terrorism fears and conflicts between Western and Arabic countries, is likely to cause policy concerns, as did the Dubai ports expansion. Someone at the NSA has to be worries that the next Mohammed Atta will be training at the DAE University. And there are more mergers to come. It will be interesting to see the extent to which DAE evolves from passive investment to active control.
