Equitix Investment Management buys stakes in AirTanker defence business from Rolls-Royce, Babcock for £315m

Sep 14, 2021 | News

Rolls-Royce Holdings and Babcock International Group on Monday said they have agreed to sell their stakes in AirTanker Holdings Ltd to London-based private equity firm Equitix Investment Management Ltd, while Airbus SE plans to maintain its holding in the venture.

AirTanker Holdings is a joint venture among Rolls-Royce, Babcock, Airbus and Thales SA that owns 14 Airbus A330 Voyager aircraft. Airbus and Thales now have the right to intervene and buy Rolls-Royce and Babcock’s stakes on the same terms, instead of Equitix.

“Airbus will not make comments on other companies’ decisions to sell stakes in AirTanker. We will continue being part of AirTanker and believe in the great value it delivers to the UK customer and its armed forces,” a spokesperson for Airbus said.

A spokesperson for Rolls-Royce told Alliance News that Thales, like Airbus, is not part of the deals announced today and remains a stakeholder, although she couldn’t comment on their future plans for AirTanker Holdings. Thales has been approached for comment.

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Both Rolls-Royce and Babcock will keep their respective 24% stakes in a separate joint venture, AirTanker Services Ltd. The services venture operates the aircraft to provide air-to-air refuelling and other aviation support to the UK Ministry of Defence.

Rolls-Royce said it will receive £189m for its 23% shareholding in AirTanker Holdings, of which £47m will be used to repay shareholder loans. London-based Rolls-Royce will use the proceeds to cut debt. The deal is subject to regulatory approval and is expected to complete by the end of the first quarter of 2022.

Babcock will get £126m, minus £31.1m loan repayments, for its 15%. It also plans to use the money to pay down debt.

It means the London-based defence contractor has reached its £400m target for disposals in the 2022 financial year ending March 31.

Since the programme was announced in April, Babcock has raised £429m including debt from the sales of its oil and gas business, Frazer-Nash Consultancy Ltd, and AirTanker Holdings. Babcock is continuing to work on possible disposals, a spokesperson said.

Equitix describes itself as a “developer and fund manager of core infrastructure and renewable energy assets in the UK and Europe.” It has raised £7bn in equity.

Shares in Rolls-Royce were up 1.1% to 110.41 pence in London on Monday afternoon. Babcock was up 3.4% to 351.60p. Airbus was down 0.1% to €114.26 in Paris.

Source: MorningStar

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