Frencken snaps up Avimac for $14m

This enables Frencken to expand into the aerospace industry.

Frencken Group Limited, through its wholly-owned subsidiary, ETLA Limited, has acquired Singapore-incorporated Avimac Pte Ltd for $14m.

As a supplier of high precision machining parts to ETLA prior to the acquisition, Avimac has supported the group’s needs in various manufacturing programs. The acquisition will enable the group to accelerate the expansion of its capacity to support customers’ new programs, as well as gain access to new technologies and competencies.

According to RHB the acquisition will allow Frencken to access new technologies and potentially build a new business in the aerospace industry. Additionally, this will allow the company to penetrate the commercial aerospace engineering industry.

“This acquisition will also allow Frencken to quickly ramp up capacity and strengthen competencies to meet the requirements in the pipeline of new programs, particularly from its customers in the semiconductor industry which have enjoyed rampant growth in the last two years and is still expected to remain strong in FY 2022,” RHB added.

The cash consideration for the acquisition was determined on a willing-seller and willing-buyer basis after taking into account, inter alia, the business operations, financial status and prospects of Avimac. The net book value of Avimac was $4.4m as of 31 July 2021. No independent valuation was conducted on Avimac. The acquisition shall be financed using the Group’s internal resources and is not expected to have a material impact on the net tangible assets per share or earnings per share of Frencken for the financial year ending 31 December 2021.

With a manufacturing facility located in Singapore, Avimac is managed by a highly skilled team that has accumulated experience of over 40 years serving major players in the global aerospace sector. Avimac was started in 2018 by Joe Lau, who is a veteran in the precision engineering industry and the founder of JEP Precision Engineering.