The buy-and-build strategy is alive and well at Sydney-based private equity shop CPE Capital, which has cut a deal to add two businesses to its defence and aerospace contractor ASDAM.
Street Talk can reveal that ASDAM is set to acquire TAE Aerospace, which maintains engines in Lockheed Martin’s F-35 aircraft, and the Australian operations of Swiss government-owned RUAG.
The businesses, when added to ASDAM, which already owns Marand Precision Engineering and Levett Engineering, are expected to help create a $400 million a year company at the revenue line with about 1000 employees across about 20 sites in Australia and the United States.
CPE Capital boss John Haddock has achieved what no other buyout firm has managed to do in Australia. Photo: Nic Walker
That’s a unique proposition in the world of Australian private equity, which has for years struggled to crack into the lucrative world of defence and defence contracts, despite the success of other PE investors in offshore markets.
It’s getting to the scale where ASDAM could easily be big enough to make a tilt at the ASX boards, or be snapped up by a bigger Australian or offshore player keen to get into the defence services market. It is understood to be the biggest Australian-based company servicing the defence sector.
There’s considerable thinking behind the roll-up, and a decision to target F-35s – a fighter jet used by the Royal Australian Air Force and about a dozen other air forces around the world. CPE Capital started with Marand, which makes vertical tails installed on F-35s, while TAE Aerospace has the contract to maintain F-35s throughout the Asia Pacific, taking it from manufacturing through to maintenance.
It is understood RUAG Australia was up for sale as part of its parent’s global program to sell non-core assets.
As of 2025, RUAG Australia will have lead responsibility in the Pacific region for the maintenance, repair and overhaul of F-35 components in the repair technology groups of valves, auxiliary power systems, landing gear components and hydraulics, pneumatics, pneudraulics and Hydro-Mechanical.
Marand is an innovative manufacturer that cut its teeth in Australia’s car industry before broadening its horizons to provide engineering solutions to defence, aerospace, rail and mining clients. It was founded 50 years ago by Andy Ellul.
PwC and G+T advised CPE Capital. An announcement is expected on Thursday.
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