“The global financial community has not provided enough capital to the business jet industry. We want to do this.”
This is a bold statement for a week old start-up to make in front of more than 30 business jet financiers at our CJI Miami conference. But David Rowe, executive director of Global Jet Capital and former executive vice president at Gulfstream Financial Services, is confident that it is true. And that they can grow a $2 billion portfolio in the next few years.
Global Jet Capital is also not a small start-up. Backed by GSO Capital Partners, The Carlyle Group and Rowe’s AE Industrial partners, which specialises in aerospace, the company plans to offer operating leases, finance leases, mezzanine debt and pre-delivery payment financing for business jets.
It also has an impressive team. Global Jet Capital’s other executive directors are Bill Boisture – former president of Gulfstream, NetJets and Hawker Beechcraft, and Sean Vick, who has held senior roles at Gulfstream Aerospace, Bombardier Aerospace, British Aerospace, Hawker Beechcraft and Landmark Aviation. Vick is also chairman of Global Capital Jet’s executive committee.
The other team members (listed below) are also very experienced and include Robert Gates, a highly-regarded commercial aircraft financier as well as Claude Franco and Simon Davies who both helped create Guggenheim Partners’ business aircraft joint venture with UBS.
The company is based in Boca Raton, Florida but Rowe believes that most of its deals will be outside the US. “The US is well served with financiers including regional banks, but we may be able to help with weaker credits or clients wanting higher advance rates or progress payment financing,” he said. “But most of our growth will probably come from the rest of the world.” Rowe also thinks there may be opportunities to work with other GSO and Carlyle companies
Gates, who was also a managing director at a similar commercial aircraft fund called RPK Capital that was also backed by The Carlyle Group, says that one of Global Jet Capital’s main advantages is that it is not a bank.
“We offer very flexible capital,” says Gates. “Obviously a transaction has to make sense but we do not have a set of boxes that have to be ticked. There is no rule saying “thou shall not finance aircraft X.”
Global Jet Capital is willing to provide loans to both customers that want to provide guarantees (or recourse) and non-recourse loans. It is also keen to be a true business jet operating leasing company.
Gates and Rowe say they are keen to finance pre-owned aircraft as well as new deliveries and could work with other lenders to offer mezzanine financing. An example of this would be when an aircraft buyer can obtain 85% of the aircraft’s cost from their bank and then get 100% financing by borrowing the remaining 15% from Global Jet Capital. It will also consider 100% finance leases.
One thing that sets Global Jet Capital apart from traditional financiers is its desire to offer true operating leases to business jet owners.
With an operating lease, the user makes monthly payments and then simply return the aircraft at the end of lease. (Whilst they are popular in the US because of tax advantages, they often include an option for the aircraft’s user to buy the aircraft at the end so are slightly different.)
Roughly 40% of all commercial aircraft are financed through operating leases and this has been a fast growing market for helicopters (GSO Capital is also an investor in a new helicopter operating lease company Lobo Leasing). Global Jet Capital believes that there is a demand for operating leases in the business jet market.
“Historically, business jet operating leases have been short, we would like to see if we can make them longer, perhaps as long as 12 years,” says Rowe, “this is partly because we like the idea of matching our longer term capital to leases. We are confident that we have the capabilities to manage these assets and transfer them between lessees.”
Rowe says that Global Jet Capital will offer sale and leasebacks and also buy leases from other financiers.
Helicopter and commercial aircraft leasing companies regularly place speculative orders with aircraft manufacturers and Rowe says that this is something that they will consider. It is unclear if all business jet manufacturers will be keen to do this. Gulfstream, in particular, has anti-speculation policies. But Gulfstream has allowed Minsheng Financial Leasing to place speculative orders for Chinese customers.
Speculative orders are popular with leasing companies as they provide quick growth and Launching with a team of seven professionals and the high expectations of GSO and Carlyle, Global Jet Capital clearly has pressure to grow.
“We are building a portfolio to help us form the basis of a platform,” says Rowe. “We do want to grow and we see opportunities where other financiers are pulling back.”
OEMs are always keen to encourage new sources of capital and Bombardier, Embraer and Gulfstream have all welcomed the launch of Global Jet Capital. Existing financial institutions say that the market is becomingly increasingly competitive.
“They are clearly smart guys with lots of experience,” says one banker. “But it will be fascinating what they end up closing. We clearly think the market for new deals is more competitive than they do.”
Shawn Vick, Chairman of Executive Committee, Global Jet Capital and General Partner, AE Industrial Partners and Executive Director
Worked at Gulfstream Aerospace, Bombardier Aerospace, British Aerospace, Hawker Beechcraft and Landmark Aviation.
Bill Boisture, Executive Director, Global Jet Capital and Operating Partner, AE Industrial Partners
Former CEO at Hawker Beechcraft, Gulfstream Aerospace, NetJets and Butler Aviation. Former Director and Senior Advisor for aerospace at The Carlyle Group and serves on the board of Landmark Aviation.
David Rowe, Executive Director, Global Jet Capital, and Founder and Managing Partner, AE Industrial Partners
Before founding AeroEquity in 1998, he was an executive vice president at Gulfstream Financial Services Corp. and at GE Capital.
Claude Franco, Senior Managing Director
Worked at Sikorsky Aircraft, GE Capital, Gulfstream Aerospace and Guggenheim Partners.
Robert Gates, Senior Managing Director
Worked at Chase Manhattan Bank, Merrill Lynch and RPK Capital.
Simon Davies, Managing Director
Worked at Sierra Advisors, Guggenheim Aviation Finance and Bombardier structured finance.
Mike Ellis, Managing Director
Former vice president of pre-owned aircraft sales at Gulfstream, and vice president of pre-owned aircraft sales and global flight operations at Hawker Beechcraft.
Boyd Harden, Managing Director
Worked at Flight Options, Marquis Jet and various financial companies. A former Marine Corp office and pilot he is also an entrepreneur and launched Toddler Teams a company that customises child seats.
James Noonan, Managing Director
Worked at Hawker Beechcraft, StandardAero, Landmark Aviation, ONI Systems, Oracle and Citibank.
Leona Qi, Managing Director
Worked at BNP Paribas, Nomura International and Guggenheim Securities