We backed the buyout of Fernau Avionics in June 2007. Fernau is a world-leading designer and manufacturer of Navigational Aids to the civil and military aviation markets in the UK, Europe, North America and the Far East. The buyout was from Glendale International, a quoted Canadian company. We invested £8 million for a significant majority equity stake.
Deal Features
At the time of our investment in Fernau we funded the entire package including a notional senior debt portion. This highlights our ability to be flexible where it makes most sense in securing a deal - in this case, guarantee of deliverability.
We were attracted by Fernau's reputation in its market for providing products with the highest technical standards - an absolute necessity in an air navigational aid. This has helped the company secure important new contracts with blue chip customers including civil aviation authorities and military users. An ageing infrastructure around the globe means Fernau is in a good position to benefit from the continuing and necessary upgrade to the installed base of Navigational Aids.
We take a partnership approach to our investments and will work closely with the management team to develop the business through organic growth and to make acquisitions that will take Fernau into new markets to better serve existing customers and to develop new customers.
Business Description
Fernau employs 70 people from its Luton base. Founded in 1970, the company has sold over 1,000 navigational systems which are installed throughout the world. In addition to the design and manufacture of Navigational Aids, Fernau provides associated services including site survey, installation, system commissioning, training, spares and repairs, and logistics support. Fernau's products meet the increasing demands for greater reliability, performance and control.
Navigational Aids are primarily fixed, ground-based installations which transmit a series of radio signals which allow pilots to navigate safely and efficiently and gain accurate location information. The equipment is owned and maintained by government and national bodies as it is safety-critical and security-critical. For example the 2020 DME (Distance Measuring Equipment) advises the pilot the distance to an airport or waypoint. Virtually all airports in the UK use Fernau's DME due to its high reliability and ease of operation.
Fernau's Perspective
Kevin Kearns, Fernau's Managing Director added, "Dunedin understood very quickly that Fernau has the potential to be a real growth story. Over the last two years we have signed major contracts with new customers in both the North American and European markets. We are focused on building upon these successes by producing innovative products of the highest reliability backed up with first rate customer support.
"Dunedin are very keen to explore ways of assisting the management team to improve the business. For example they have recently agreed to invest a substantial amount of money in a new ERP system which will greatly increase the efficiency of all our business processes."
