Case study

Sigma Components

Sigma is a leading component supplier serving the global commercial aerospace sector.

Based in the UK, it is a precision engineering manufacturer specialising in aerospace pipes, ducts, fabrications and precision surface finishing. Its customers include engineering company Rolls Royce, aerospace company Safran, aircraft manufacturer Airbus, planes and trains manufacturer Bombardier and defence and aerospace company BAE Systems.

At the time of our investment, in 2016, it had 3 manufacturing locations in the UK and two in China and employed about 750 people. It has a team of more than 40 engineers and a strong record of bringing new products to market.

Sector

Manufacturing

Location

United Kingdom

Investment date

2016

Deal size

£65m

Fund

Mid-market fund

Status

Unrealised

Website

sigma-aero.group

Strategy

Accelerating organic growth

Improving operational performance

Internationalisation

Our investment

We identified Sigma as a strong investment opportunity due to it supplying mission critical components on growing aircraft programmes and due to significant potential to grow its manufacturing operations in China.

Silverfleet’s previous experience of supporting international expansion, including in China, made us the ideal partner for Sigma. We have enhanced its production capacity in China to complement Sigma’s UK operations in order to provide leading, high quality component manufacturing for customers and to help them by demonstrating “local content” when they supply engines / aircraft to Chinese airlines.

Part of our attraction to the deal was also the opportunity for Sigma to buy Rolls Royce’s internal pipe manufacturing facility in the UK, which would greatly benefit from Sigma’s leading manufacturing management processes and international capacity. This acquisition was integral to Sigma’s growth.

Value creation

Much of our value creation plan for Sigma is based on fundamental operational improvement. We have increased the capacity of the Xi’an and Chengdu sites in China to satisfy demand and capitalise on the high quality of the products made by Sigma’s China teams.

Previously, Sigma’s teams in China would make a limited number of components, which would then arrive at the company’s UK sites to be assembled and finished before being shipped to customers. We have increased the number of components that Sigma’s sites in China are approved to make from 20 to 450 following substantial investment in staff, machinery and training. In addition, a number of pipes are now approved to be assembled, finished and shipped from China direct to Sigma’s customers.

The expansion in China has proven hugely successful – it has enabled Sigma to become one of the qualified partners for the manufacture of the new Leading Edge Aviation Propulsion (LEAP) engine built by Safran and GE, which powers single-aisle jets worldwide, including the Airbus A320neo and the Boeing 737 MAX.

Meanwhile, we are helping management grow Sigma in a relatively fragmented marketplace. We will pursue buy and build opportunities to expand into new geographic regions and adjacent market segments.