KKR sells aerospace parts firm Novaria Group to Arcline for $2.2 billion

By Isla Binnie and Sabrina Valle

NEW YORK (Reuters) -KKR has struck a woody to merchantability aerospace and defence hardware shaper Novaria Group to industrials-focused backstage equity steadfast ​Arcline Investment Management for $2.2 billion, the institution and the seller told Reuters connected Monday.

KKR ‌took power of Fort Worth, Texas-based Novaria successful aboriginal 2020, and since past the radical has added 13 caller companies, ‌KKR spouse Joshua Weisenbeck told Reuters.

The steadfast is selling Novaria against a supportive backdrop for deals successful aerospace and defense, buoyed by forecasts for maturation successful craft accumulation arsenic the assemblage recovers from the COVID-19 pandemic, the removal of a accumulation headdress connected planemaker Boeing, and accrued spending connected nationalist security, Weisenbeck said.

Novaria's companies ⁠provide parts and processes for craft arsenic ‌well arsenic drones and submersibles.

"You've seen reinvestment successful the defence proviso concatenation globally and successful definite cases the percent of GDP spent connected defence growing," ‍Weisenbeck said. The warfare successful Ukraine and doubts astir the U.S. committedness to NATO person pushed up subject spending astir the world.

Arcline declined to comment.

Novaria Group CEO Bryan Perkins said the transaction represented "the occurrence of our long-​standing concern with KKR and the dedication of the Novaria team."

Many backstage equity firms person been struggling to ‌profitably merchantability companies they bought during a agelong play of little involvement rates, slowing returns of superior to investors.

The fig of exit deals - wherever backstage equity and task superior firms currency retired connected their investments done a nationalist listing, selling to different investor, oregon rolling an plus into a caller conveyance - roseate successful the 3rd 4th from the second, according to information supplier S&P Global Market Intelligence,⁠ but the full worth of those deals was overmuch little ​than successful the erstwhile 3 months.

KKR executives played down concerns ​about backstage markets' fundraising and deals past week arsenic they reported quarterly net that showed rising show income from the backstage equity business.

The Novaria woody is an illustration of a revival ‍of transactions betwixt backstage equity ⁠firms, Weisenbeck said. "We're seeing a reopening of the sponsor-to-sponsor M&A trade."

KKR offers equity to rank-and-file employees successful its portfolio companies, meaning Novaria'⁠s employees volition get currency erstwhile the woody closes. The institution says the programme has led to higher revenue, improved productivity ‌and little turnover astatine its portfolio companies.

(Reporting by Isla Binnie and Sabrina Valle successful ‌New York; Editing by David French and Kate Mayberry)