Investec Aviation Finance has held the first close of its Aircraft debt fund – Aquila Debt Fund – with USD250m.
The Aquila Debt Fund will invest in aircraft debt and brings a new class of investors to the sector.
The fund has the ability to scale it up to circa USD500m. Investec is also co-investing in the fund.
Investec Aviation Finance has attracted investments for its various funds from insurance companies, pension and superannuation funds, private banking and high net worth individuals across various geographies.
The key investment proposition of the fund is:
· Opportunity for professional investors to invest in a diversified portfolio of aircraft secured debt
· Investment in a real asset class which has a demonstrated track record of providing stable and uncorrelated returns
· Managed by the aviation finance team within Investec
The fund is structured to comply with regulatory requirements for investors under Solvency II as well as have the ability to secure an investment grade credit rating on the notes issued by the fund.
Investec Aviation Finance is the asset manager for the fund, sourcing transactions as well as providing on-going advisory services.
Investec Aviation Finance has circa USD3bn of aircraft assets under management. It has previously raised two equity funds: Investec Global Aircraft Fund and Investec Aircraft Syndicate Limited, worth USD1bn and USD650m respectively. These two funds acquire aircraft which are then leased to major airlines including Qantas, Air France and Air China.
Ramki Sundaram, head of Investec Aviation Finance, says: “We are delighted to bring in non-traditional sources of investment into this space through Aquila Debt Fund. The fund will invest in aircraft debt, which is a world first, bringing a new class of investors to the sector, effectively competing with and complementing traditional bank financing.
“We see an increasing demand for investment in this alternative real asset class, primarily due to the combination of good cash yields, providing stable and uncorrelated returns, which the fund aims to satisfy.”