US bank Wells Fargo has teamed up with Irish aircraft-leasing group Avolon to establish a standalone joint venture.
The new entity will be called Avolon Capital Partners (ACP) and will be based in Dublin.
Precise details of the shareholdings of the two parties were not disclosed, nor their investments in the venture.
However, Wells Fargo will own a majority of the equity and provide all of the debt for the new investment vehicle.
ACP is targeting a portfolio size of $500 million (€374 million) , which will be raised via equity and debt. This equates to about 10 aircraft.
Sale and leaseback
It will focus on sale and leaseback transactions with airlines on new aircraft.
ACP will operate separately from Avolon. It will be led by Daire Ó Críodain, an Avolon executive who is being seconded to the new venture.
Avolon’s chief financial officer Andy Cronin will serve as a director on the board of ACP.
Wells Fargo’s interest in the aircraft-leasing sector is well established. The lender is an investor in Avolon and was among the final three bidders last year for Dublin-based RBS Aviation Capital, which was sold to Japan’s SMBC.
“This is the next step in what is a good and deep relationship ,” Avolon’s chief executive Dómhnal Slattery told The Irish Times.
Julie Caperton, head of asset-backed finance and securitisation at Wells Fargo, said the lender was “pleased” to deepen its relationship with Avolon.
Mr Slattery said there would be no conflict between Avolon and ACP operating within the same sector.
No conflict
“There won’t be be any conflicts of interest. ACP will collaborate with Avolon and they will look at transactions together. This expands our footprint and our ability to put capital to work.”
Since its formation in 2010, Avolon has raised $3.7 billion of debt capital from a range of institutions.
Avolon had more than 160 aircraft in September 2012. Mr Slattery said the company had a “very strong” performance in 2012. The transaction is subject to regulatory approvals.
