Avio sale knocked off course by Italian politics

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A renewed attempt by private equity owner Cinven to sell Italian engine components maker Avio appears to be a temporary victim of Italy's latest governance crisis, with prime minister Mario Monti's resignation triggering elections which may not come until February leaving no prospect of a deal being signed off by Rome before year-end.

Avio, whose main business is component parts for civil aero engines including major positions on General Electric's GEnx, Pratt & Whitney's PW1000G, Rolls-Royce Trent 900 and the Powerjet SaM 146, is part-owned by the Italian government via a 14% stake held by Finmeccanica, itself one-third owned by the state.

Cinven, which in 2007 bought Avio from another private equity investor, Carlyle Group, is believed to have shelved plans for a stock market flotation in favour of a trade sale, possibly to GE - though Safran is also understood to be in the frame.

An Avio IPO planned for the first half of 2011 was called off owing to poor market conditions, but Cinven and Avio management have remained on IPO alert; Italian regulators granted 12-month approval for a stock market sale in June 2012, so shares could be put on the block as soon as details of an offer are published.

The aborted 2011 IPO was expected to value the company at around €4 billion ($5.2 billion), a figure comfortably in line with first-half revenue of €1.13 billion and EBITDA of €214 million, up a quarter and 13% respectively on the period in 2011.

Avio declined to comment.