Firms commit $750m to aircraft leasing company

Avolon, and its three private equity partners, Cinven, CVC Capital and Oak Hill Capital, intend to capitalise on the current and expected market conditions within the global aircraft leasing sector.

Dublin-based aircraft leasing group Avolon has received $750 million in commitments from Cinven, CVC Capital Partners and Oak Hill Capital Partners. Each firm has committed $250 million to enable Avolon to bolster its fleet.

With this equity investment, Avolon will focus on expanding its aircraft fleet and provide sale and leaseback and other financing services to airlines globally, said a spokesperson. It has executed contracts and letters of intent for the purchase of 26 aircraft.

Avolon, which is led by CEO Dómhnal Slattery, the former founding CEO of RBS Aviation Capital, provides aircraft leasing and lease management services.

“This equity investment, coupled with the $615 million of debt finance, will allow us to grow significantly,” said the spokesperson.

Avolon has agreed initial debt financing of $615 million; a $400 million warehouse debt financing facility arranged by UBS and $215 million provided by DVB Bank.

Aviation finance has been increasingly targeted by alternative investment groups in recent years, signaling a recovery in the aviation markets.

Last month, The Carlyle Group and RPK Capital Management formed a new company that will purchase more than $1 billion of assets in the commercial aviation sector.

Carlyle agreed to invest $600 million in global commercial aviation assets with the Chicago-based aircraft leasing and investment company.

In March, Carlyle sold Vought Aircraft, a parts manufacturer for airplanes, to Triumph Group for $1.44 billion, including $525 million in cash. The deal included the retirement of Vought debt. Once the deal closes, Carlyle will own 31 percent of the outstanding stock in Triumph, which also makes parts for airplanes.

Last year, TPG-controlled XOJET secured another large financing round, bringing its total raised since 2007 to roughly $3.3 billion. TPG and Abu Dhabi investment firm Aabar led the most recent round, comprising $100 million in equity and $370 million in debt that allows for the purchase of new and used aircraft.
Guggenheim Partners and Fortress Investment Group also manage aviation investment units.