£1.5bn Aerospace Group Doncasters Catches Buyout Giants' Eye

Some of the world's biggest investment firms are weighing offers for Doncasters, a British precision manufacturing group being put on the auction block by its Dubai-based owner.

Sky News has learnt that Blackstone (NYSE: BX - news) , Carlyle and Clayton Dubilier & Rice (CD&R) are examining takeover bids for Doncasters, which makes components used across industries such as aerospace and oil and gas.

An auction of the company, which traces its roots back to 1778 when it was founded in Sheffield, is kicking off this month and could fetch a price tag in the region of £1.5bn.

Doncasters is the final asset in the portfolio of Dubai International Capital (DIC (Taiwan OTC: 1818.TWO - news) ), having been owned by the emirate's ruling family since 2006, when it had grand ambitions to become one of the world's most prominent private equity investors.

Sources said that bankers acting for DIC were contacting a small group of private equity firms and specialist manufacturers to gauge their appetite to buy Doncasters.

The prospective buyers include Blackstone, Carlyle and CD&R, all of which have extensive track records investing in specialist industrial companies.

Sources said Doncasters' management - led by DIC's former boss, David Smoot - was confident it would be able to generate profits well in excess of historical levels.

In 2014, the company made underlying pre-tax profit of about £136m, roughly flat on the previous year.

Its accounts for 2015 are expected to be filed at Companies House in the coming weeks.

Doncasters specialises in working with metals and alloys that are difficult to shape, and counts Boeing (NYSE: BA - news) and Rolls-Royce among its major customers.

Last year, Mr Smoot - then at DIC - examined a management buyout of the company that would have been backed by Goldman Sachs (NYSE: GS-PB - news) and Blackstone.

Goldman is now advising on the auction, with Bank of America Merrill Lynch and Credit Suisse (LSE: 0QP5.L - news) also involved.

The process follows the sale in 2014 of Mauser, another of DIC's European investments, to Clayton Dubilier & Rice.

The Dubai-based group acquired its European portfolio just as the first signs of stress in global financial markets were becoming apparent.

Dubai was forced to default on sovereign debt repayments in 2009 amid a slump in asset prices but has since successfully restructured its borrowings.

DIC had contemplated a combined auction of Mauser, Doncasters and Almatis, a German aluminium manufacturer, but opted instead to sell them individually.

Among DIC's other troubled investments was Travelodge, the British hotel operator, which it lost control of after its finances became overstretched.

A spokeswoman for Doncasters declined to comment.