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DEALS REPORT: New lessor platforms emerge to tap investor demand

Market uncertainty – whether it be around the future intentions of the US Federal Reserve and other central banks on further interest-rate hikes, or concerns over the possibility of the US government defaulting on its debt – seem not to have dampened investor appetite for the aviation sector.

May 19. 2023

In recent weeks, former Aergo Capital head of origination Martin Browne has announced the creation of a new leasing platform, stating on LinkedIn that he would be working "alongside some fantastic equity partners" and "the industry's finest aircraft traders".

Former AWAS chief executive Ray Sisson has meanwhile established a new platform called Tailwinds Aviation Leasing, which he tells Cirium is looking to build out a portfolio of mid- to late-life aircraft.

Industry sources say another former leasing executive is also contemplating the creation of a new debt platform with his new employer.

Separately, former Castlelake executives Mathew Adamo and Jared Ailstock have established a new business called AIP Capital. The business is primarily an asset manager, and has a servicing agreement in place to manage 777 Partners' Boeing 737 Max orderbook and delivery of the narrowbodies to the US investment firm's affiliate airlines.

But AIP Capital is also planning to tap investors interested in making equity and private capital investments in the space. In an interview with Cirium, Ailstock said that despite elevated interest rates and the impact of the two "black swan" events of Covid-19 and the Russian-Ukrainian war, there remains plenty of appetite to invest in the aviation sector. "There is a lot of really different and attractive ways to get yield in the environment we are living in right now. I think a lot of people have looked at different parts of that market and said 'Well, the risk/return in X, Y, Z investment is way better than aviation', and I think some of those participants wouldn't have said that a couple of years ago," says Ailstock. He sees a particularly compelling opportunity to invest in mid-life narrowbodies such as the Airbus A320ceo and A321ceo and the 737NG, which he believes will remain in demand amid production delays at the big OEMs.

But Ailstock says investors need to take a long-term view of the industry, contrasting it with bonds or stocks that can flipped in short order.

"Where we have seen success are folks that have either been coming into the space for the very first time, because they view the entry point as being a lot more attractive today because there isn't as much equity in the space, or guys who have been able to weather the storm and they view aviation as a core part of their strategy and they will continue to deploy equity throughout various cycles," he says.

Robert Jack, senior managing director at Volofin Capital Management, comments: "I think it must be more difficult to raise equity now than prior to the steep rise in interest rates. Investors who are not dedicated to aviation will be looking at relative value and where else they can put their money.


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