Private Equity News & Analysis

TPG-backed XOJET secures $470m

The latest funding raised by the private jet company – which competes with Warren Buffet’s Net Jets – was led by TPG and Abu Dhabi-based Aabar.

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TPG-controlled XOJET has secured another large financing round, bringing its total raised since 2007 to roughly $3.3 billion.

The US private equity firm and Abu Dhabi investment firm Aabar have led the most recent round, comprising of $100 million in equity and $370 million in debt that allows for the purchase of new and used aircraft.

The debt is not the typical corporate leverage model associated with a private equity deal, TPG Growth managing partner Bill McGlashen told PEO in May 2008, when the company secured $2.5 billion in debt and equity financing.

Cessna Citation X: XOJET to build its fleet
“Simplistically, it’s not corporate debt we’re raising, it’s aviation financing,” McGlashan, said. “The financing is recoursed to the aircraft, not the company.”

Down payments for aircraft orders, which take years for manufacturers to fulfil, and aircrafts’ full purchase price, are paid for using the aircraft financing, he said.

“You have to order a lot of planes in advance and it just takes time to scale,” McGlashen said. “Our challenge has not been getting customers. Our challenge has been literally getting the aircraft to scale the business.”

The XOJET investments have been made via TPG Growth’s STAR fund, which closed in late 2007 on roughly $1.5 billion.

Founded in 2006, XOJET allows companies and individuals to charter private flights and or share in the ownership of aircraft. Its competitors include Warren Buffet-backed Net Jets.