Private equity firm Permira bets on Chinese aviation growth as it buys Hong Kong aircraft parts distributor Topcast
- The European private equity firm takes a bullish view on China’s aviation sector despite US China trade tension has stalled passenger demand
- Deal values Topcast at US$300 million, sources say, as founders divest as part of their succession planning
Private equity firm Permira said it has agreed to buy Hong Kong-based aircraft parts distributor Topcast Aviation Supplies from its founders, as it takes a bullish view on the growth of China’s aviation sector.
Alex Emery, head of Asia for Permira, said the deal was partly driven by the succession planning of Topcast’s founders who have led the business for three decades. Thomas Hung, managing director and one of the founders, decided to sell a majority stake in the company to Permira, which will seek out external talent to steer the business forward.
Emery refused to comment on the financial details but a separate source told the Post that Permira has bought a 90 per cent stake in Topcast. With an a enterprise value of US$300 million, that would value the deal at US$270 million.
He said both Hung and Calvin Li, the director of marketing and sales, will retain a minority stake in the company and will remain in leadership positions. Completion of the deal is expected in November, pending regulatory approvals.
“We take a long-term view on the industry. As China’s economy continues to develop over the next decade, demand for business, tourism needs would continue to lead to more airports to be built in China, and fuel growth in the country’s air passenger volume,” said Emery.
In June, passenger-volume growth for Asia-Pacific stalled from the previous month, as the US-China trade war weighed on passenger demand for the region. For Asia, international revenue passenger kilometres (RPK), a gauge that shows the number of kilometres travelled by paying passengers, was up 4 per cent year-on-year, the same growth rate seen in May.
International freight tonne kilometres, a measure of freight traffic, for the region’s airlines in June were down 5.8 per cent from a year ago, as the slowdown in China’s economy also weighed on air cargo volumes, data from the International Air Transport Association shows.