Avolon, the aircraft leasing group, today announces it has successfully completed its initial capital raise of US$1.4 billion including an equity commitment of US$750 million from three of the world’s leading private equity firms.
The US$750 million equity commitment was subject to EU merger and takeover approval which was received on 18 May 2010.
Highlights
- US$1.4 billion capital raised
- US$750 million equity capital committed equally by leading private equity firms Cinven, CVC Capital Partners (“CVC”) and Oak Hill Capital Partners (“Oak Hill Capital”)
- US$400 million warehouse debt financing facility arranged by UBS (MLA) with co-arrangers Credit Agricole, Deutsche Bank and KfW Ipex-Bank - the first facility of this type to be successfully executed since 2007
- US$215 million term debt financing facility provided by DVB Bank
- Avolon to become a leading player in the global aircraft leasing sector
- Avolon team has significant experience in delivering innovative sale and leaseback and financing transactions to the world’s airlines
- Avolon has executed contracts and letters of intent for the purchase of 26 aircraft. A number of other transactions are in advanced stages of discussion with airlines globally. Avolon also provides lease management services on a further 2 aircraft
- Denis Nayden appointed Chairman of Avolon with over thirty years experience in the aircraft leasing sector
Mr Nayden commented:
“Avolon has successfully attracted significant equity capital to develop the business into a global leader in aircraft leasing. This successful equity raise and the support of such highly respected aviation banks reflects the strength of the team assembled, their experience in the sector and the opportunity presented by current market conditions. Cinven, CVC and Oak Hill Capital have identified Avolon as the right investment opportunity, led by the right team, entering the market at the right time.”
Avolon
Headquartered in Ireland, Avolon provides aircraft leasing and lease management services. Avolon is led by an experienced team with offices in Dublin, New York, Hong Kong and Shanghai.
Avolon’s initial focus is to expand its aircraft fleet and provide sale & leaseback and other financing services to airlines world-wide. Avolon also provides lease management services to third-party aircraft owners.
As of today, Avolon has executed contracts and letters of intent for the purchase of 26 aircraft comprising Airbus A320s, Airbus A330s and Boeing 737NGs. These aircraft are leased to airlines around the world including airlines in China, the UAE, the United States, Russia and Western Europe. A number of other transactions are at an advanced stage of discussion with airlines globally. Avolon also provides lease management services on a further 2 aircraft.
Avolon is led by Dómhnal Slattery, CEO, who is the former founding CEO of RBS Aviation Capital, one of the largest aircraft lessors in the world. The management team of 15 professionals has a proven track record in aircraft leasing and has an extensive network of established senior industry relationships across the airline, manufacturer and aviation banking sectors. In particular, the team has significant experience in delivering innovative sale and leaseback and financing transactions to the world’s airlines.
Denis Nayden, an industry veteran with over thirty years experience in the aircraft leasing sector, has been appointed as Chairman of Avolon.
Market Opportunity
Aircraft operating leasing has grown to become a core mechanism for the financing of commercial aircraft. Over 30% of the entire global fleet of aircraft - in excess of 6,000 commercial passenger jets - are leased to approximately two thirds of the world’s airlines.
In recent years, approximately 40% of all new aircraft deliveries (c. 400 aircraft per annum) have been financed through operating lease structures. Given the tightening of available bank and capital markets financing, operating leasing has become an increasingly attractive option for airlines seeking to finance deliveries of new aircraft and to release equity from aircraft within their existing fleet. This growth in demand for leasing services also comes at a time when a number of the large incumbent aircraft lessors are experiencing capital constraints. It is estimated that over US$450 billion of aircraft finance will be required by the world’s airlines over the next five years.
Avolon, together with its three private equity partners, intends to capitalise on the opportunity presented by current and expected market conditions within the global aircraft leasing sector. Airlines need to renew their fleets both for replacement and growth while also addressing liquidity and balance sheet issues. These combined factors will drive continued growth in the demand for sale and leaseback transactions and for operating leases generally.
Capital Raising | Equity
Avolon has equity capital of US$750 million committed from three leading private equity investment firms: Cinven, CVC and Oak Hill Capital. Each firm has committed US$250 million. Cinven, CVC and Oak Hill Capital all bring complementary strengths to the Avolon business and each has a range of experience in the aerospace and transportation sectors.
Capital Raising | Debt
Avolon has also agreed initial debt financing of US$615 million. This comprises a US$400 million warehouse debt financing facility arranged by UBS as Mandated Lead Arranger with co-arrangers Credit Agricole, Deutsche Bank and KfW Ipex-Bank. This transaction marks the reopening of the lessor warehouse market and is the first facility of this type to be successfully executed since 2007. Avolon has also secured a US$215 million term debt financing facility provided by DVB Bank.
Avolon was advised by Freshfields, KPMG and Maples and Calder.