Private equity fund in £8.5m aerospace deal

CARDIFF-BASED private equity fund WestBridge Fund Managers (WestBridge Capital) had made its biggest investment to date in backing a £8.5m management buy-out.
The deal has enable a management team to acquire Devon-based Aero Stanrew – one of the UK’s leading designers and manufacturers of specialist electronic components for the global aerospace industry
WestBridge, which was established in 2008, has provided £4.2m in equity finance.

Aero said it will use the growth finance to exploit emerging overseas markets to increase sales and profits at the company following a management buyout.
With a workforce of 172 the £11m turnover business supplies complex electromagnetic modules and electronic systems to blue chip customers including Rolls Royce, GE Aviation, Goodrich and Thales.
As well as its headquarters in Barnstaple it has a manufacturing site in Tunisia.
Clive Scott and his team – Chris Evans, Owen Rolfe and Peter Vaughan – led the buyout after being with the company for a combined total of 40 years
Mr Scott said: “Although Aero Stanrew is already in a very strong position with a strong order book and recession-resistant business model, this deal provides us with the opportunity to pursue ambitious plans for further growth.
“We are particularly pleased to have backing from WestBridge because the team there already has a proven track record in our sector and have a refreshing approach to investment.
“They have a network of industrial investors who deliver practical, hands-on advice and guidance that is borne out of experience. It’s truly an added-value service that provides much more than just money.”
A member of WestBridge Capital’s co-investment club, Phil Crawford-Smith, has been appointed independent chairman of Aero Stanrew.
He said: “I’m delighted to have been invited to take up this role. Clive and the team are strong operators who’ve built an exceptionally well positioned business.
“I’m looking forward to working with them to develop Aero Stanrew even further over the next few years and take full advantage of the comprehensive market opportunities available to the company.”
Guy Davies, chief executive of WestBridge, said: “We are pleased to support the entrepreneurial vision of Clive and his management team by providing funding that enables them to pursue ambitious and realistic plans for continued growth.
“This is a very robust business and its value will be considerably enhanced as the team builds on its strategic approach to business development. The directors have strong knowledge and experience of the sector. Working closely with them, we have already identified and agreed a number of key strategies for growing the business over the next few years.
“Emerging markets, particularly in the Far East, are expected to drive future growth in the global civil aerospace market and we fully intend to exploit all the opportunities this presents.”
Mr Davies added: “Aero Stanrew will also extend its product range, enter new markets and the team will continue adopting a proactive approach to marketing and new business development. In fact, we’ve already got a number of exciting opportunities in our sights.
“Add to this, the fact that conservative estimates predict the production of 26,000 new passenger aircraft by 2029, and we see a very bright future indeed.”
WestBridge is in the process of raising finance for up to a £50m SME fund. Fundraising will close next month. At first close it had secured more than £10m in backing. WestBridge has an investment range of between £1m to £5m in high-growth potential SMEs.
Guy Davies, chief executive of WestBridge Capitalhttp://tourism9.com/    http://vkins.com/

Steffy: Cheeseheads may have stadium financing right

Laugh not at the cheeseheads.
Last week, the Green Bay Packers began selling shares in their team for $250 each. In return, buyers get almost nothing.
As an investment, buying a piece of the Pack isn’t a smart move, but as a means for financing stadiums, the team may be on to something. Taxpayers in Houston, who have underwritten about $1 billion worth of sports facility bonds, may want to take note.
The Harris County-Houston Sports Authority services the debt on Reliant Stadium, Minute Maid Park and the Toyota Center. It has faced a cash squeeze since 2009, when the firm that insured the bonds got downgraded. Ballooning debt payments and a one-time drawdown earlier this year have eaten into the authority’s reserve account, and some of the bonds were in technical default.
While an actual default is unlikely anytime soon, revenue to pay the debt is tied to hotel and rental car taxes, which have slowed because of the recession.
Even the new Dynamo stadium, which the team will pay for, comes with city and county commitments for infrastructure upgrades.
By comparison, the Packers’ “stock offering” is really a voluntary stadium tax paid at the discretion of fans. The team wants to finance a $143 million expansion of the iconic Lambeau Field, but Green Bay, a city of only about 100,000, lacks the tax base to fund a Reliant-style sports palace.
As the Motley Fool pointed out, the Packers, the only publicly owned team in U.S. professional sports, isn’t a bad investment on paper. Its first public offering in 1950 had a split-adjusted price of 2.5 cents a share. Based on the latest offering price of $250, Packers stock would have generated a return 200 times better than gold, and better than buying Apple in 1984 or Ford in 1977.
Except you’ll never realize that return. The Packers are nonprofit, so there are no earnings and no dividends paid to investors. Under the terms of the offering, the shares can never be sold or transferred except to an immediate family member. If the team catches you trying to sell, it can buy the shares back at the 1950 price of 2.5 cents.
No leg up at all
What’s more, your investment bears no privileges typically associated with ownership – no premium seating, no ticket discounts, not even a chance to jump ahead on the legendary season ticket waiting list, now several lifetimes long. You get a stock certificate and an invite to the team’s annual meeting.
So it isn’t really a stock offering at all, which may be why the Securities and Exchange Commission had nothing to do with it, and, as the prospectus points out, no “federal, state or international securities laws” govern it.
The Packers timed the offering well, selling more than $46 million worth of stock in the first two days, capitalizing on last season’s Super Bowl victory and this year’s as-yet-undefeated season. The team may sell as many as 880,000 shares, raising as much as $220 million.
A few differences
The Houston Texans are, of course, not the Green Bay Packers. This year is the franchise’s most promising, but these days coach Gary Kubiak is hoping his squad can make it to the playoffs before even the water boy winds up on injured reserve.
Also unlike the Packers, the Texans are owned by a consortium of wealthy businessmen who believe they shouldn’t have to pay for things like stadiums.
They convinced elected officials, as team owners in many other cities have done, that taxpayers should foot, or at least guarantee, the bill.
By comparison, the Green Bay approach seems more simple and more fair. Let those who love the sport pay for the facility. Call it a user fee, call it a voluntary tax or call it a “stock offering.”
In the end, the cheeseheads may have the last laugh.
Loren Steffy is the Chronicle’s business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy. Follow him on his Facebook fan page and on Twitter at twitter.com/lsteffy.

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