Arlington Capital joins bidders for Carlyle-owned Forgital

Arlington Capital, a private equity firm specializing in the aerospace sector, has emerged as one of the contenders for Forgital, the Vicenza-based manufacturer of forged and laminated rings for the aerospace industry, currently controlled by Carlyle. This brings the total number of bidders to four, with Arlington joining Lone Star, Warburg Pincus, and Cinven in the race.

Arlington Capital joins bidders for Carlyle-owned Forgital

According to sources, a dozen initial offers were submitted by major international private equity funds, which were reviewed by financial advisor JP Morgan, legal firm Latham & Watkins, and Carlyle, the investment giant led in Italy by Marco De Benedetti, Managing Partner and Co-Head of Europe. Following a thorough screening of the non-binding bids, five funds have been shortlisted to submit revised offers by the end of the year. All remaining bidders are noted for their strong expertise in the industrial sector.

Other bidders

Among the finalists is the UK-based private equity group Cinven, which has an established track record in Italy across various industries, including retail, industrial, and insurance. Cinven previously invested in the aerospace sector with its decade-long ownership of Avio, a deal that also originated from Carlyle in 2006. Cinven later sold Avio’s aviation operations to General Electric in 2012 for €3.3 billion, including €1.44 billion in debt, while the space activities were taken public through a SPAC merger. The other three contenders are reportedly all U.S.-based funds. Lone Star, with $86 billion in assets under management, has previously explored aerospace investments, including an £840 million bid for the British engineering group Senior. Warburg Pincus, another U.S. firm specializing in industrial investments, has deployed over $120 billion globally, with a focus on aerospace, particularly in the United States. Lastly, Arlington Capital, known for its aerospace focus, rounds out the list of bidders.

Questions on valuation

One of the key challenges remains the valuation of Forgital, as the final offers will need to align with Carlyle’s expectations for a full exit. Acquired by Carlyle in 2019, Forgital has shown significant revenue growth in recent years, reaching €410 million in 2023, up from €300 million in 2022. The company is projected to generate €130 million in EBITDA in 2024, with annual sales potentially reaching €500 million and a strong order backlog. Market insiders suggest that based on growth forecasts for 2025, Forgital's valuation could approach €2 billion.

Forgital's history

Founded in 1873, Forgital operates nine facilities, including six in Italy, with key sites in Velo d’Astico (Vicenza), Pedemonte (Vicenza), Fly in Grigno (Trento), RTM Breda in Carrè (Vicenza), and Cormano (Milan). The company’s focus is predominantly on aerospace, accounting for approximately 70% of its sales, while the remaining 30% is derived from the industrial sector.