By Niket Nishant and Echo Wang

(Reuters) – Carlyle-backed StandardAero racked up a $10.38 billion valuation after its shares opened 29% above the offer price in their NYSE debut on Wednesday, as investors bought into what could be one of the last major U.S. listings of the year.

The aircraft maintenance services provider had priced its offering above range to raise $1.44 billion in the third biggest U.S. initial public offering of 2024.

StandardAero’s shares opened at $31, compared with the IPO price of $24. The company had initially targeted a range of $20 to $23.

Carlyle, which offloaded some of its stake, will remain the majority shareholder of StandardAero after the IPO. Singapore’s sovereign wealth fund GIC, another pre-IPO investor, also sold some stake.

Reuters was first to report in April that Carlyle was weighing options for StandardAero, including a sale and an IPO.

“There’s a lot of public equity investor appetite for (aerospace aftermarket) sector exposure and investors appreciate the quality of StandardAero’s business,” said Doug Brandely, a partner at Carlyle who leads its aerospace investments.

Aftermarket services refer to inspections, maintenance, repairs and overhauls for aerospace engines.

“So as we evaluated alternatives, particularly given our conviction in the long-term outlook for the business, we concluded that the IPO was the best path for us and for the company,” said Brandely, who also sits on StandardAero’s board.

The company will continue to “generate additional growth from strategic mergers and acquisitions,” he added.

‘DURABLE POSITION’

Founded in 1911, StandardAero provides maintenance, repair and overhaul services to clients in commercial, business and military aviation sectors.

“(Being) a public company and operating in the public equity markets gives us access to a whole additional group of business partners to allow us to continue to expand our services to the different sub segments of the aerospace market,” said Russell Ford, chairman and chief executive of StandardAero.

“The airlines are more focused on flight operation and not deploying their cash resources towards engine maintenance… so more and more of that work has been migrating our way. We’re in a very good, solid, durable portion of the market that will continue to expand, I think for many years to come.”

Strong travel demand against the backdrop of slower new plane deliveries has compelled carriers to rely on older jets that typically require complex maintenance.

The Scottsdale, Arizona-based company’s customers include aircraft engine makers GE Aerospace, RTX unit Pratt & Whitney, Rolls-Royce and carriers such as American Airlines and Southwest Airlines.

U.S. IPOs have picked up pace in the last few weeks as a rally in equities and renewed hopes of a soft landing for the economy draw back investors after a brief summer lull.

Such share sales have raised $32.2 billion from 155 deals this year as of Sept. 30, outpacing 2022 and 2023 levels, according to Dealogic.

StandardAero’s listing could be among the last major new issues in 2024 as most analysts expect a substantial recovery only next year.

“We’re coming to a pocket in the calendar where you have a whole bunch of uncertainty around the (presidential) election, which is probably going to keep a lid on activity over the next couple of months,” said Mark Schwartz, EY Americas IPO and SPAC advisory leader.

Still, a rally in equities may encourage some to push forward with their plans.

“I anticipate that companies already in the pipeline, especially those that stand to benefit from the AI wave, will push forward with their IPOs before the election,” said Joe Endoso, CEO of private market investment platform Linqto.

(Reporting by Prakhar Srivastava, Niket Nishant and Nathan Gomes in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

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