London-based aircraft and engine financier volofin Capital Management closed a 107-asset portfolio transaction.
Acting as the sole lender and lead arranger, volofin facilitated the $50 million refinancing for European investment firm RIVE Private Investment, secured against a portfolio of 107 aircraft engines and auxiliary power units (APU) currently on short-term leases to a diversified group of lessees.
"We have always financed complete aircraft and standalone engines and we've also financed landing gears, but we have not financed a portfolio of APUs," said volofin Capital Management managing director Jan Bockelmann, speaking to Airline Economics. "So the collateral assets here are narrow- and widebody APUs and turboprop engines."
Bockelmann said "high number" of assets and flexible structure to the borrower and servicer made the transaction different for the company.
"This transaction provides flexibility, given the short-term nature of those leases, they're revolving all the time. For that to happen within the structure itself, with very limited input or involvement from the lender side – that’s new," said Bockelmann. "Obviously, there are financial and portfolio parameters and guidelines that need to be adhered to and other protections that we have, but that is the new part."
The 107-asset portfolio are said to be a fairly balanced mix of APUs and engines. The bulk of the engines are the PW100 family engines, used on the Q400 and ATR-72 aircraft.
"It is a non-conventional, but deep aviation asset class, critical for aircraft maintenance cycles, and this structured financing paves the way for new acquisitions to expand our asset portfolio," said RIVE investment director Bachir Lahsini.
The assets are managed by LXA Leasing, a company which specialises in engines and APUs.
"LXA Leasing success is based on our team’s readiness to support the spare engine and APU needs for our OEM, MRO and global airline customers," said LXA Leasing founding partner and CFO Jean-Christophe Normand. "This refinancing of 107 assets of our portfolio will enable an increased level of support to our customers and to sustain the fleet growth they require for their operations."
In conjunction with the transaction, RIVE secured an equity investment from Turning Rock Partners, which became joint owners of the asset owning company.
Watson Farley & Williams (WFW) advised RIVE on the transaction. The WFW aviation team that advised RIVE was led by Paris partner Alexia Russell.
"We are pleased to have assisted long-standing client RIVE on this complex transaction combining dual equity and debt financing," commented Russell. "Our aviation team's deep sector expertise was vital in ensuring the successful closing of this deal involving unusual market assets."
Seabury Securities acted as exclusive financial advisors and placement agent for RIVE Private Investment and LXA Leasing. Clyde & Co and Holland & Knight acted as legal counsel to the lender and Turning Rock Partners, respectively.