During 2012 investors have turned circles from pulling out of markets at the start of the year fearing a EU meltdown to looking for safe havens in government bonds and back to the current status quo of seeking yield once more. This, as we here have been saying for years now, should lead investors to look at the aviation sector.
Real-estate is once again the focus for many investors in the here and now but real-estate are fixed assets depending on the local economy for returns. In this current economic environment, real-estate is in many ways far less attractive than investing in aircraft. Real-estate yields are lower than those for aircraft investment on the main and an aircraft can be moved from jurisdiction to jurisdiction deleting the local economic and political risks to an extent. And yet in all of this GECAS had to push-back an aircraft-leasing trust planned for this month – this of course was its planned $750 million IPO in Singapore that we reported at the time.
GECAS stated that the push-back was due to general wariness about aircraft being a depreciating asset, compounded by what they saw as a general lack of interest in IPOs at the moment.
The bottom line is that investors now want predictability. But if you scan the aviation market you can clearly see pockets of class: investment funds that have yield indications and clear entrance and exit parameters from aircraft portfolios such as the Investec funds right through the spectrum from the likes of investing in a lessor mixed portfolio funds such as those of ORIX Aviation through to the Doric Nimrod funds. All have clear exit strategies and yield profiles from throughout the aircraft lifecycle from purchase to part out, via Apollo Aviation funds and the high yield parts inventory investment market with players such as Aventure Aviation and AJ Walter offering high class investment options.
The aviation sector must answer clearly and up front the stigma question associated with airlines and point out that airline investment funds such as the Guggenheim ETF are actually good performers. We must then move off this to hammer home the many benefits of investing in the metal asset.
This is what Airline Economics has been doing actively across the globe at our closed, invitation-only Aerospace investment days throughout 2012 and this is why we are able now to pull out a great number of large institutional investors and private banks to our AE Dublin 2013 event. Look to more information available from next week on the fund managers at AE Dublin 2013. It will delight those booked and shock those not booked I am sure.
GECAS was right, there is little appetite for aircraft asset backed IPOs right now, they are not predictable when dealing with large portfolios because it does not pass the predictability test. Many other options in the aviation sector are built to pass the predictability test and we should be shouting about those more often so that a solid grounding of investor appetite can be established and fostered. It is all in our hands and the window of opportunity remains wide open into 2013, we just need to highlight offerings such as the Investec funds more often when approaching new investors.
Ironically right now it is the French banks, such as CA-CIB who are at the forefront of investor education and although the French banks might not have the direct funds to invest themselves as they once used to, they have found for themselves the trust of others that allows them to continue to keep the wheels turning and introduce an entirely new set of possibilities and options. 2012 has been a very interesting and great year, 2013 will be no different.
The delegate list issued yesterday for Airline Economics Dublin 2013 is not the full up-to-date list. We have booked many more delegates and airlines since November 1 when the list was compiled, including three airline CFOs just today.
Remember the 2-for-1 offer of £1270 + VAT for a full delegate pass expires at midnight tomorrow Friday 30th November 2012. So please book today to avoid extra costs. www.aedublin.com.