Baird Capital will focus on opportunistic M&A and explore a potential expansion into the APAC region with ecube, an aircraft disassembly and end-of-life business, director Andy Dyer and partner James Benfield told PE Hub Europe.
Ecube, headquartered in St Athan in Wales, was acquired by Baird in August 2020. The company provides storage, disassembly and parts re-use and recycling services to global aircraft owners, including major airlines and aircraft leasing companies. Last October, ecube jetted over the Atlantic and opened its first North American facility in Coolidge, Arizona.
“Initially, our plan is to is to consolidate and build out – we’re very new in the US, we want to get that site up and running and add service lines as well,” Dyer said.
By entering the US market, Baird has doubled its addressable market for ecube, according to Benfield. “It’s a lot to take on for a small business in St Athan.”
Arizona is only one destination on ecube’s journey, as Baird Capital sees another opportunity in the APAC region. The firm has stationed a team in Singapore to evaluate a market entry. “Whether we get there during our hold period, or whether it’s for the next owner, we will see,” Dyer said. “It’s a very young market, the aircraft are relatively young, but it’s coming.”
With M&A, Dyer expects a more opportunistic approach. Baird might consider assets that fit services ecube currently contracts in, or that are especially valued by its customers. These would be within ecube’s core geographies of the UK and US.
“The big part of the value creation is building out the service proposition,” Dyer explained. “For every aircraft that lands, it will require certain services along with maintenance. We’re looking at what bits of that we can reasonably do.”
Developing ecube’s circular economy capabilities is also on Baird’s pre-flight checklist. This includes helping to recycle components that aren’t currently recycled to become remanufactured. The firm is also working with partners on the recycling of carbon. “Most of the aircraft are predominately aluminium and titanium,” Benfield explained. “But it will become a big part of what we do in the future.”
As with many other sectors, industrials feel the effects of inflation, currency uncertainty, energy costs, geopolitical problems and recession. A couple of years back, Baird made a conscious decision to narrow down within industrials into a couple of subsectors. Two of these were energy transition and the circular economy. “Within industrials, there are some really interesting pockets and places to play,” said Benfield.
Ecube isn’t the only aerospace investment in Baird’s portfolio. It also includes CAV Systems, a UK-based provider of ice protection safety systems and drag reduction technology. “Both of our businesses in the aerospace sector have sustainability at their core,” Dyer said. Ecube is a circular economy business, whereas CAV creates drag reduction and ice protection systems that make aircraft safer and more fuel efficient, he explained. “Those are important drivers for us and hot topics that continue to be important going forward.”
Gazing into the future, Dyer considers ecube a “great fit” for a broad range of strategic and financial investors, given the company’s growth, margin profile and the opportunity to add on services.
“It really is biting off a very small part of this market today.”