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© 2007 Paragon
Advisory Pty Ltd
Private equity moves on defence
ADELAIDE private equity fund Paragon has taken up a "substantial minority stake" in Elizabeth-based defence engineering firm Levett Engineering.
The $1.5 million investment will fund Levetts work on the Joint Strike Fighter project, Paragon chief executive Geoff Thomas said.
"Levett Engineering is now in a position where it is one of four precision machining companies in Australia which have been selected to bid on more than $2 million of machining work on the supersonic fighter project," he said.
"Investment in the JSF is important but also the fact the firm will be able to access global sales into the aerospace market where it will be part of the global supply chain.
The agreement gives Paragon a seat on the Levett board and provides for three tranche payments on completion of certain targets over the next 12 months. The investment will fund the hiring of key staff and additional equipment purchases.
The company this year signed a $23 million letter of intent with US engine manufacturer Pratt & Whitney to produce components for the JSF afterburner, managing director Paul Levett said.
But the Paragon investment will allow the company to concentrate on growing turnover from $2 million company to $10 million, he said.
"Our main focus will be to concentrate on the JSF because it puts us into a better market," he said.
"Pratt & Whitney have a lot of other products as well.
"If we manufacture this for the F135 (JSF), it allows us to look at other engines . . . and other opportunities."
"The project is worth US$300 billion, and opportunities here in Australia are up to $9 billion for Australian industry. And that is just Lockheed Martin, without any of the propulsion systems."
Levett Engineering will visit the Paris Air Show this month to drum up business with other manufacturers, Mr Levett said.
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