Stellwegan targets €1bn of deals in bid to shake up air finance
DUBLIN-BASED aircraft financing firm Stellwagen Capital intends to complete “at least” $1bn (€867m) a year of deals and will raise an additional $250m (€217m) in capital later this year as it “disrupts” the aircraft financing market for commercial jets.
Its CEO, former Ryanair finance boss Howard Millar told the Irish Independent Stellwagen Capital, a unit of Stellwagen Group, will also likely raise at least $250m each year for the next few years.
It has previously raised $200m and Mr Millar said he’ll likely target investors such as pension funds and insurance companies to secure fresh capital.
Stellwagen Capital revealed yesterday that it has finalised a loan to China Aircraft Leasing Company (CALC) using a new senior loan investment vehicle, with a 10-year financing solution.
Mr Millar said that the loan structure – unlike leasing – enables an aircraft operator to own the jet. Loan repayments on the product remain relatively low over the course of the loan, reducing cash outflows to service it.
A balloon payment is due at the end of the loan period, at which time the borrower can refinance or sell the asset and clear the loan.
Mr Millar said CALC has financed a new Airbus A321 with Stellwagen Capital, as well as another aircraft. He said that Stellwagen will complete two other aircraft financing deals with another client in coming weeks. “We are now going to be competing with the big aviation banks, so I would see this as a big disruptor,” he said. “They won’t like this. It’s a new form of competition and is filling a gap that has arisen in the market.”
Mr Millar said he will be “disappointed” if Stellwagen Capital doesn’t have at least $2.5bn of assets under management by the end of this year. It currently has $1.6bn.
Mr Millar, who is also the chief operating officer of Stellwagen Group, added that some big aviation banks are exiting the aircraft financing sector, in some cases in response to new accounting rules.
“What they’ve operated was a high-cost, inefficient and inflexible solution,” he said.
“So if you’re a mid-tier airline or mid-tier operating lease company, you’ll find it very hard to source financing from those guys.
“If you take a $50m aircraft, I’ ll advance $40m on that asset, but give a balloon of $10m which is paid at the end of the loan, so there’s only $30m in capital being paid off (until the end of the loan).
“If you’re a chief financial officer, that’s pretty good because your cash outflows are going to be lower. We’re creating a disruptive force in aviation financing.”
Stellwagen Capital will target financing of new and used single-aisle aircraft such as Airbus A321s and Boeing 737s. However, Mr Millar, who’s still a Ryanair non-executive director, said he will also consider financing of new-technology jets such as the Boeing 787 Dreamliner and the Airbus A350.
“I’m going for aircraft that have a big, liquid market,” he said.
Stellwagen Group was acquired last year by Canada’s Acasta Enterprises for $270m. As part of that deal, Acasta also committed $100m to Stellwagen Capital’s senior loan investment vehicle.
About 55pc of the world’s commercial aircraft fleet is financed via debt and equity, and 45pc by leasing companies.
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The campaign invites people and communities to share stories and tips on how they are making big efforts to live more sustainably in a variety of ways – from the ordinary efforts to the quirky and the inspirational; from how they make the most of the natural world around them to how they conserve energy and recycle or even find new purposes for their waste. To inspire potential #SustainabilityHeroes, members of the public are invited to share their stories on www.facebook.com/BordnaMonaIreland. Photo: Marc O’Sullivan