Business aviation finance could be attracting more private investors


More private investors could be entering the business aviation finance sector, in a bid to get a better return than the money markets are offering, according to one finance provider.

Global Jet Capital, which is itself capitalised by three global investment firms, believes that more private equity firms and hedge funds could be considering making their money available to the corporate jet market. This is because they want to diversify their portfolios and reduce their exposure to equities and bonds.

Global Jet Capital’s chief operating officer, Dave Labrozzi, argues that these factors, combined with the value of mid to larger business aircraft stabilising after several years of falling prices, mean that specialists outside the sector are becoming more interested in aircraft financing.

Labrozzi said: “Several key stock market commentators are predicting a stock market correction, and there is growing volatility in the markets. Private equity firms and asset managers are increasingly looking for ways to invest their funds in a way that offers low correlation with equities and bonds but which also provides a strong income.

“Business aviation finance offers exactly this, and you have the added security of having the loan secured against a valuable asset.”

He told Corporate Jet Investor that if you looked at “essential market fundamentals” around the world, interest rates were low and stock markets continued to be flat. Financial dealers were looking for “a good place” to invest their funds that give them something more than a low interest rate would.

He added: “The value of corporate jets has continued to decline but I think the rate of decline has slowed considerably. We are seeing some aircraft that are a little bit older and well-informed buyers are buying them.”

Global Jet Capital is capitalised by GSO Capital Partners, the Carlyle Group and AE Industrial Partners. In January 2016, it bought GE’s corporate aircraft lease and loan book in the Americas. It currently has $2.5 billion in assets under management.