The private equity firm, which bought the aerospace aftermarket company's parent from Carlyle in 2022, is working with advisers, Bloomberg News reported, citing people familiar with the matter. Deliberations are early, and an IPO or continued ownership remain options.
One of the private equity industry's larger aerospace holdings may be heading for the exit.
Veritas Capital is exploring a sale of Chromalloy, a provider of parts and repair services for aircraft engines and industrial gas turbines, 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 contacting potential buyers in the coming weeks, barring a sudden change in market conditions, the people said.
Deliberations are at an early stage. Veritas could decide not to sell, take Chromalloy public or keep it. Likely bidders include rival companies and private equity firms, the people said. Veritas declined to comment.
What Veritas bought
Veritas completed its purchase of Sequa Corp., Chromalloy's parent, from funds managed by Carlyle on Dec. 13, 2022. Chromalloy was Sequa's only remaining business after the sale of Precoat Metals. Terms of the 2022 deal were not disclosed.
Chromalloy, based in Palm Beach Gardens, Florida, sells replacement parts approved by the Federal Aviation Administration, along with repair and resale services. It competes in the aftermarket, the business of keeping engines running after they are sold, which tends to generate steady revenue as long as planes keep flying.
What the $10 billion figure is
The figure is a potential sale value described by people familiar with the matter. It is not a bid, an agreed price or a disclosed valuation. Whether it refers to the value of the whole enterprise including debt or only to the equity has not been reported.
Why buyers are interested
The resilience of air travel has driven interest in businesses that support the aircraft fleet, the people said. Engines need parts and repairs for as long as planes stay in service, which is why aftermarket businesses tend to attract buyers looking for durable cash flow.
A test of the exit market
A sale at that level would rank among the larger exits by a U.S. private equity firm this year. It would come in a market where the total value of exits has recovered to its highest in 18 quarters while the number of exits has fallen to a 22-quarter low globally, according to KPMG's latest industry report. Large, high-quality assets are finding buyers. Most of the industry's holdings are not.
That makes the aerospace aftermarket one of the sectors where sponsors can still attempt big sales. A strong price would give the industry a fresh reference point for how these businesses are valued.
What to watch
Whether Veritas begins formal outreach to buyers in the coming weeks, which strategic and private equity bidders emerge, any steps toward an IPO, and whether market conditions cause the process to pause.