New funds, IPOs and fleet expansions – here is a quick round up of some of the major stories from the aircraft leasing industry.
Aircraft leasing continues to grow rapidly
Canadian private equity firm Almada has announced its first fund specifically focusing on aviation leasing. With an initial investment of $80 million (€70 million), Toronto-based Almada will invest in mid-life, narrowbody and special purpose aircraft. The company has bought three aircraft to date, with two other aircraft under contract.
Martin Goldfarb, Almada co-founder and chairman believes the aircraft leasing sector is due to “outperform” other investment opportunities in the coming years: “It is a very attractive business – growing rapidly in size, with strong lease yields and strong air travel demand. Almada will continue to grow its role in the supply chain by making opportunistic secondary market purchases of in-demand and in-production narrowbody aircraft.”
Stellwagen on board
The firm are currently sourcing additional aircraft through Dublin-based aviation leasing specialists, Stellwagen Group. They will also service Almada’s aircraft, which are typically 8 to 10 years old. Almada will look to the Irish firm’s expertise to acquire, lease and sell additional planes in the future. Goldfarb said Almada will focus for now on owning narrow-body passenger planes that can be converted for service for different airlines at a relatively low cost.
Almada’s short-term goal is to acquire up to a dozen aircraft, which would translate into a $150 million to $200 million investment. In addition to airlines, Almada is planning to lease to a variety of different clients including governments, non-government agencies such as humanitarian groups and cargo companies.
Almada has received backing from “wealthy individuals, family offices and institutional investors”, in addition to the founders’ capital. The fund has invested more than $200 million and has 10 professional employees.
Sirius IPO – grounded for now
Another new aircraft leasing participant, Sirius Aircraft Leasing Fund, has had its initial public offering (IPO) delayed. Headed by former Ryanair chief financial officer Howard Millar, the fund was originally to float on the London Stock Exchange in November. The company has decided to extend the planned timetable moving the IPO to early December.
The fund is said to have already identified portfolios of planes it intends to buy as soon as possible following the IPO. In the first six months the fund is expecting to invest $250 million (€219 million). Millar said the fund is looking to target the “attractive dividend yield of 8% per annum with the potential for capital upside.”
A programme of share placings over the coming year will look to raise up to $300 million more, boosting the Sirius war chest to $1 billion.
Millar added: “Globally we intend to leverage this capability to access portfolios of in-demand single aisle aircraft (with leases attached), principally from lessors disposing of older aircraft in order to maintain the average age of their fleet. We are currently assessing a number of attractive portfolios and anticipate that the funds raised will be deployed within 6 months of admission.”
CDB to treble fleet
Irish based aircraft leasing company, CDB Aviation Lease Finance, is set to treble the size of its fleet. The firm is owned by China’s national development bank, one of the largest financial institutions in the world, with assets of more than $2 trillion.
Based in Dublin, CDB Aviation Lease Finance is a wholly owned Irish subsidiary and the main aircraft leasing operation for China Development Bank. It declared a dividend of $62.4 million at the end of the 2017, up $55 million from the previous year. With a current fleet of almost 90 aircraft, the company spent more than $1.1 billion in 2017 and bought 24 new aircraft, up from five in 2016.
Boeing and Airbus to be added
According to its accounts, CDB Aviation Lease Finance said that, has committed to buying 93 aircraft from Boeing and 91 from Airbus. The aircraft are due to be delivered between this year and 2024.
“The group intends to further develop its business. It will also pursue opportunistic transactions to sell aircraft to manage the composition of its portfolio,” the company said.
“We plan to raise additional debt in 2018, with support from our parent company, to finance these new aircraft additions and refinance existing debt.”