Global Jet Capital, the specialist business jet financier that launched last year, has bought GE’s $2.5 billion US corporate aircraft finance portfolio. The 16 people who work in GE’s corporate jet finance team will also move to Global Jet Capital.
The portfolio consists of more than 300 aircraft in the US, Canada, Mexico and Latin America. It is made up of both loans and leases.
“This is a prime example of our industry expertise and investment capital coming together”
“We are investing heavily in growing the business both organically and through strategic acquisitions such as this one with GE. This is a prime example of our industry expertise and investment capital coming together to evaluate and identify an opportunity to expand the business in a disciplined, carefully measured way,” said Shawn Vick, executive director of Global Jet Capital. “The price point of these aircraft range between $25 and $75 million on average, and corporate users and high net worth individuals will seek competitive financing solutions rather than allocate their own cash resources which are better invested in their own businesses.”
It means that Global Jet Capital has become one of the largest financiers of business jets in its first year. Global Jet Capital is backed by GSO Capital Partners (part of Blackstone), Franklin Square Capital Partners, The Carlyle Group and AE Industrial Partners.
Global Jet Capital first went public at Corporate Jet Investor Miami in September last year (it was formally launched at NBAA). Since then it has closed a few international transactions. The GE portfolio gives it relationships with a wide range of US companies and high net worth individuals.
“This is a remarkable portfolio of corporate aviation assets, and this investment underlines our confidence in the long-term growth prospects of the large cabin, long range private jet market,” said Vick.
GE was advised by JP Morgan and Shearman & Sterling. Global Jet Capital was advised by Deutsche Bank Securities, Bank of America Merrill Lynch and Citi. Its legal advisers were Latham & Watkins, Clifford Chance and Kirkland & Ellis.
“We are excited to sell our Corporate Air portfolio to Global Jet Capital, an up-and-coming player in the corporate aircraft space,” said Keith Sherin, chairman and CEO of GE Capital. “Global Jet Capital is a well-backed private equity player eager to expand its corporate aircraft portfolio. Their resources will provide tremendous value to the portfolio and greatly benefit our customers.”
GE announced that it would sell $200 billion of financial assets in April. Jeff Immelt, chairman and CEO of GE said GE Capital would concentrate on three businesses: GE Capital Aviation Services – which finances commercial aircraft and large helicopters; Energy Financial Services; and Healthcare Equipment Finance (it actually sold Healthcare for $8.5 billion to Capital One in August).
“Today’s announcement is another testament to the speed and value we are delivering as we execute on our strategy to sell most of the assets of GE Capital.”
Since then it has sold a number of businesses including its personal finance group, commercial trucks and property. Sherin said: “Today’s announcement is another testament to the speed and value we are delivering as we execute on our strategy to sell most of the assets of GE Capital.”
Before 2008, GE Capital was one of the most active financiers of business jets both in the US and internationally. After the credit crunch it reduced the size of its corporate aircraft finance portfolio and become much more selective. In November 2013 Element Capital bought GE Corporate Aircraft Finance’s $250 million helicopter finance portfolio.
GE is keen to stress that it is committed to GE Capital Aviation Services, one of the world’s two largest commercial aircraft leasing companies. In October 2014 GE Capital Aviation Services paid $1.78 billion for Milestone Aviation Group. Milestone was launched in 2010 by Richard Santulli. Santulli also founded NetJets.
Global Jet Capital and GE hope to close the sale in the next few months.