HedgeCo.Net — Veritas Capital is exploring a sale of Chromalloy, a provider of parts and repair services for aircraft engines and industrial gas turbines, in a process that could value the business at more than $10 billion, Bloomberg News reported late last week, 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, and Veritas could decide not to sell, take Chromalloy public or keep the business, according to the report. Likely bidders include rival companies and private equity firms. Veritas declined to comment. The $10 billion figure is a potential sale value described by people familiar with the matter, not a bid or an agreed price, and it has not been reported whether it refers to enterprise or equity value.
Veritas bought Chromalloy’s parent, Sequa Corp., from funds managed by Carlyle in a deal completed in December 2022, on undisclosed terms. Chromalloy, based in Palm Beach Gardens, Florida, was Sequa’s only remaining business after the sale of Precoat Metals. It produces FAA-approved replacement parts and provides repair and resale services, competing in the engine aftermarket, the business of keeping engines running after they are sold.
The aftermarket has become one of the most sought-after corners of aerospace for financial buyers. Resilient air travel, aging fleets and constrained new-aircraft deliveries have pushed airlines to keep engines flying longer, which supports steady, recurring demand for repairs and approved alternative parts. That profile, closer to a services annuity than a cyclical manufacturing business, is what lets sponsors underwrite premium multiples and what is likely to attract strategic interest.
For allocators, the process is a test of whether the exit window is open for large sponsor-owned industrial assets after a volatile stretch in equity markets. A sale at or above the reported level would give Veritas a realization roughly four years after it bought the parent from Carlyle. The decision to keep IPO and hold options open suggests sponsors are still pricing several exit routes side by side rather than committing to one.