Balmoral Funds LLC, a Los Angeles-based private equity firm, is pleased to announce the successful conclusion of its longstanding partnership with KP Aviation (or the “Company”). The partnership, which began in 2008, saw Balmoral provide strategic support and capital to fuel KP Aviation’s impressive growth.
During the partnership, Balmoral made nondilutive capital investments in KP Aviation through a series of structured “dequity” (hybrid debt/equity) investments between 2015 and 2018, facilitating an astounding 10x increase in revenues within just four years. In 2019, Balmoral further solidified the relationship by entering into a lightly-structured minority common equity investment with KP Aviation.
While the end of this partnership marks a bittersweet moment for Balmoral, we look back with pride on the successful collaboration and commend the KP Aviation team on their achievements. Over the years, we have valued our interactions with the KP Aviation team and are excited to witness their journey as they forge a new future in partnership with Bain Capital Special Situations.
We extend our congratulations to Kim Schulze, who will continue as CEO and maintain a significant ownership stake in the Company she has worked tirelessly to develop. The dedication and leadership demonstrated by Kim and her team have been instrumental in KP Aviation’s significant growth.
THE STORY
In 2015, KP Aviation sought a capital partner to accelerate its growth but encountered challenges in securing traditional sources of capital due to its size and lack of institutional backing. Additionally, the complexity of KP Aviation’s business model, including collateral packages involving inventory held outside of the US, presented ABL/security interest issues. In response, Balmoral and KP Aviation embarked on a series of joint venture financings, culminating in Balmoral infusing an additional $20 million in permanent equity capital in 2019, thereby becoming minority equity partners in KP Aviation.
Throughout the partnership, Balmoral actively supported KP Aviation from a board level, providing valuable resources, enhancing KPI reporting and asset acquisition underwriting models, offering debt financing, and sourcing third-party debt capital in 2021. Despite, what to management’s credit, was only a temporary setback caused by COVID-19, KP Aviation’s earnings grew nearly 20-fold from 2015 through 2022, showcasing its resilience and promising future.
“We are very excited for the future of KP Aviation, and our experience with them leaves us eager to continue our commitment to partnering with innovative, growth-oriented companies like KP Aviation and helping them reach their full potential,” said Robin Nourmand, Managing Director at Balmoral Funds.
Kim Schulze, CEO of KP Aviation, said, “The partnership with Balmoral has been an extraordinary journey defined by shared vision, trust, and a firm commitment to achieving the highest standards of performance. We sincerely thank the Balmoral team for their partnership, which has been integral in shaping KP Aviation into the industry leader it is today. The invaluable lessons learned and lasting relationships forged during our 8-year partnership are cherished.”
KP Aviation was advised by Perella Weinberg Partners and VedderPrice for financial and legal matters, respectively, during this transaction. Holland & Knight represented Ms. Schulze and her affiliates.
We extend our appreciation to Vedder Price and Holland & Knight for their exceptional legal representation throughout this transaction. Their expertise and industry knowledge were crucial to the favorable outcome. We would also like to express our special thanks to Perella Weinberg Partners for their exceptional work in this transaction. Their unwavering dedication and expertise in the aviation services industry and deal execution were instrumental in reaching a successful conclusion. We commend their professionalism and dedication to securing the best possible results for all parties involved.
About Balmoral Funds LLC:
Balmoral is a Los Angeles, CA based private equity fund, founded in 2005, with approximately $1.2 billion of assets under management. Balmoral’s objective is to be the financial partner of choice for entrepreneurial and successful C-suite executives and operating advisors creating transformative, revitalizing change in the businesses they co-invest in together. Balmoral typically invests in companies that have revenues between $30 to $500 million and require equity investments of $10 to $100 million, with the capability of investing an additional $100 million or more in particularly compelling opportunities. For more information please visit: https://www.balmoralfunds.com
About KP Aviation:
KP Aviation is a leading global supplier of essential aftermarket materials and services, catering to the aviation industry’s evolving needs. With a strong commitment to quality and customer satisfaction, KP Aviation offers a comprehensive range of products and solutions that ensure optimal performance and safety. Headquartered in Mesa, Arizona, the company operates globally, serving a diverse customer base and maintaining strong relationships with suppliers. For more information, visit: https://www.kpaviation.net.