Investec Aviation Finance has launched its fourth aircraft leasing fund to acquire some of the latest generation Airbus and Boeing narrow and widebody aircraft, on lease to a range of international airlines.
The team has a 10-plus-year track record in the space having successfully exited their previous three equity leasing funds.
The new fund is targeting up to 50 aircraft acquisitions and has an expected lifecycle of seven years. The fund is open to institutions looking to gain exposure to aircraft leasing alongside an experienced manager and partner. The launch of this new fund, Investec Aircraft Syndicate, responds to on-going demand for alternatives and real assets as a complement to traditional asset classes with which it is uncorrelated.
It is further demonstration of Investec’s commitment to a sector where it has USD6 billion of aircraft assets under management and has invested across the capital stack over the last ten years. Investec is capping the fund at USD500 million and has already secured over USD150m of cornerstone investment from European financial institutions. Investec Aircraft Syndicate’s second close is expected in Q1 2019.
Investec has a long track-record in aviation finance, launching its first equity fund, Investec Global Aircraft Fund (IGAF) in 2008. Investec has also pioneered the aviation debt fund product and has over USD1.2 billion of investments in various funds from financial institutions, including pensions and insurance companies. Across debt and equity Investec’s funds are currently exposed to over 200 aircraft.
The launch of the new fund comes at a time when consumer demand for airline travel is projected to undergo further strong growth over the next 20 years. As a result, airline manufacturers predict the size of the world’s commercial airline fleet will double to over 40,000 aircraft by 2035. This growth will require financing in excess of USD100bn per year, a cost which cannot be borne by the airlines alone and will require significant institutional investment. Aircraft leasing has infrastructure-like characteristics and can generate attractive absolute returns in comparison to other asset classes which have historically attracted infrastructure and real assets investors.
Alok Wadhawan, Head of Aviation Finance at Investec, says: “Since we launched our first equity fund ten years ago, Investec’s platforms have delivered consistent returns to investors. We’ve managed aircraft through the cycle and have successfully monetised three funds by selling 75+ aircraft over the past three years, building strong credentials in this space. The commitment by insurance and pensions companies in the UK and Germany who have chosen us as a partner to advise on their investments in aircraft leasing through this fund are testimony of our team’s capabilities. As we are approaching the second round of fundraising we are looking to deploy the initial capital.”
