Former Ryanair CFO building leasing war chest

Sirius vehicle which launches in London next month will use cash to buy up to 25 jets in bid to attract UK big names

HOWARD Millar, the former chief financial officer of Ryanair, expects a new aircraft-leasing fund he’s floating on the London Stock Exchange next month to have as much as $1.5bn (€1.3bn) of funds within the next three years.

Mr Millar, who was also a deputy chief executive at Ryanair and still sits as a non-executive director on its board, has teamed up with aviation executives Ed Coughlan and Ed Hansom to launch Sirius Aircraft Leasing Fund.

In a statement to the stock exchange, the fund said that it intends to raise an initial $250m from investors, and could raise another $300m within a year after its flotation.

All the equity raised will be matched with the same amount of debt, giving it a relatively low gearing compared to some similar funds.

The fund will invest in mid-life, single-aisle aircraft such as Boeing 737s and Airbus A320s that are typically between eight and 12 years old. Such aircraft have a lifespan of about 25 years. It will buy aircraft from leasing firms, with leases attached.

Sirius is targeting an 8pc dividend yield, and a total return target of an internal rate of return of 10pc. Speaking to the Irish Independent, Mr Millar said that the initial fundraising will see Sirius target between $200m and $300m in equity. He said if it can raise $300m at the outset, Sirius will take it.

“The initial response has been really good,” said Mr Millar, who added that formal roadshow begins this week. Sirius is being advised by Liberum Capital and Davy Stockbrokers. “We think there’s very strong demand,” he said, saying the majority of investors will be from the UK.

“They’re the big name pension and insurance funds, fixed income investors – they’re all very sizeable,” he said. “This is geared very much towards a London market.”

The initial equity and debt funding should be sufficient to buy about 20 to 25 aircraft.

“Some of the portfolios will have very big [airline] names in them. They’d be first tier airlines,” said Mr Millar. “A typical first lease on an aircraft is about 12 years. There will be a real spread of credit in it. You’ll have top tiers, you might have startups and low-cost carriers. It’s not what I would call he lower end of the credit scale. You get what’s called a ‘sweet and sour portfolio’.”

Mr Millar, Mr Hansom and Mr Coughlan all worked with aviation management and finance firm Stellwagen until last year. The firm later took legal action against the trio in an effort to prevent them from allegedly planning to use “highly confidential material”, to compete with Stellwagen.

The three executives denied Stellwagen’s claims.

Sirius will invest in mid-life jets such as Boeing 737s and Airbus A320s