Rolls-Royce plans to sell ITP Aero to Bain-led group for USD 1.7 Bn

Rolls-Royce plans to sell ITP Aero to Bain-led group for USD 1.7 Bn
  • Rolls-Royce agrees to sell its Span-based ITP to a consortium led by Bain Capital Private Equity.
  • The anticipated deal marks the realization of the firm’s £2bn disposal target for pandemic recovery.

British multinational aerospace and defense firm Rolls-Royce Holdings plc takes a significant step towards mending its battered balance sheet by agreeing to sell its Spanish aircraft engine manufacturing arm, ITP Aero, to an association led by private equity giant Bain for USD 1.7 billion (£1.5bn). The consortium also includes industrial group Sapa and JB Capital.

The move is a part of its major disposal program with a set target of £2bn (approx. USD 2.3 billion) as the firm suffered a financial loss due to the grounding of flights amid the COVID-19 pandemic. It assured its investors that it would raise the set target from disposals this year.

Rolls-Royce also sold its maritime engines business Bergen, and its stake in Air Tanker, which conducts in-flight refueling for military aircraft.

The aero-engine company witnessed considerable profit in the first half of this year, though it warned that it would miss a target of £750 million (USD 870 million) in free cash flow next year due to the slow pace of international travel recovery.

It is to be noted that Rolls-Royce’s shares have surged amid expectations of a quick recovery in UK-US air travel.

Previously, Causeway Capital Management, the company’s key investor, had stated that Rolls-Royce should consider the future of its ship and train power systems business and focus on aerospace and defense, and also urged incoming chair, Anita Frew, to refresh the board as the company emerges from the crisis and attempts to address the decarbonization challenge.

Leading global investment banking firm Goldman Sachs Group Inc. advised Rolls-Royce on the sale process of ITP Aero. The planned deal is subject to certain conditions, such as regulatory approvals, but is expected to finalize in the first half of next year, sources cited.