Western company owns 45-year-old intellectual property, manufacturing technology and FAA certification, wishes to "modernized" and re-certify the aircraft and seeks $30-35M to do it. Due to maturity and low growth of the US general aviation market, and to the large amount investment sought, Western company is unable to raise the money domestically.
Chinese General Aviation Market
There is virtually no current market in China as the airspace is closed to general aviation: compared to 230K general aircraft in the US, China has 1200. However, airspace is gradually opening up to general aviation in China, creating the potential for explosive growth: an average increase of 8,000 aircraft per year is forecast for the next 30 years. As China lacks immediately-certifiable general aviation technology, general aviation manufacturing deals are in hot demand in China.
- Government incentives: $35M@3 months into the project, $100M @12 months, $200M @36 months;
- JV EBITDA: $50M@Year 2, $100M@Year 3, $165M@Year 4, $200M@Year 5;
- JV Valuation: $300M@Year 2, $600M@Year 3, $1B@Year 4, $1.2B@Year 5.