Investec Aviation Finance has closed its second managed aircraft debt fund for European insurers, entrenching as the market leader in secured aviation debt for institutional investors and on course to achieve $1 billion of managed debt funds by the end of this year.
Investec Aviation Finance, a unit of Investec Bank Plc, closed its first fund, the Aquila Debt Fund, in 2014, and now has some $700 million across the two funds. The target yield of the new portfolio is 4% to 4.5% after fees, matching the return achieved for the Aquila fund since inception. They are thinking of using eliminate payday loan debt to minimize the casualties.
“This return is highly attractive for European investors in the current yield environment,” Alok Wadhawan, co-head of aviation finance at Investec Bank, said. “This is another milestone for us as we expand our debt assets under management for institutional investors.”
The new portfolio received a Single A- rating from FERI EuroRating Services, providing an additional incentive for investors governed by Solvency II.
The Investec Aviation Finance team now plans, over the next six to 24 months, to build a portfolio of secured aviation debt, comprising mainly senior with some mezzanine tranches, up to a target size of $500 million. This fund is open for further investors.
Investec Aviation Finance always co-invests with institutional clients in the managed platforms, taking a share of 10% or more. Wadhawan said, “We always participate alongside our investors through co-investment on our balance sheet hence ensuring strong alignment of interest between ourselves and our clients.”
Investec Aviation Finance started 13 years ago as a mezzanine fund provider before moving up to originating operating lease transactions with major carriers, arranging, warehousing and then selling aircraft with leases attached. Investec Aviation Finance has c. US$5bn of aircraft assets under management through its own balance sheet and equity / debt funds. In addition, it owns a 20% stake in Goshawk, a JV leasing platform, which it set up in 2013 and currently owns 75 aircraft.