Corporate Jet Investor Awards 2013
The annual Corporate Jet Investor Awards returned for the second time at a ceremony which coincided with the International Corporate Jet & Helicopter Conference in London.
Recognising excellence in business jet finance across 11 specialist categories, the awards were judged by a panel of finance specialists at aircraft manufacturers and leading pre-owned aircraft brokers.
The judging panel selected over 30 different institutions out of a shortlist of 50. To see which financiers narrowly missed out on winning an award, click here.
The winners of the 2013 Corporate Jet Investor Awards were as follows:
> Global Business Jet Financier of the Year 2013
Bank of America Merrill Lynch
> Best Private Bank for Business Jet Finance 2013
> Most Innovative Business Jet Financier 2013
Export-Import Bank of the United States and Airfinance
> Business Jet Deal of the Year 2013
ICBC Leasing financing of VistaJet guaranteed by Export Development Canada
> African and Middle Eastern Business Jet Financier 2013
> Asia-Pacific Business Jet Financier 2013
> Chinese Business Jet Financier 2013
Minsheng Financial Leasing Corporation
> European Business Jet Financier 2013
> Latin American Business Jet Financier 2013
1st Source Bank
> North American Business Jet Financier 2013
PNC Aviation Finance
> Global Business Jet Financier 2013 and Pre-Owned Business Jet Financier 2013
Bank of America Merrill Lynch
Global Business Jet Financier of the Year 2013: Bank of America Merrill Lynch
Bank of America Merrill Lynch was the clear winner in Corporate Jet Investor’s 2013 Awards retaining the Global Bank of the Year title for the second year running. The bank also won the pre-owned award and, as befits the global award, scored highly in every regional category.
“They have always been strong in the US but the international team really know what it is doing as well,” says one manufacturer. “They have really got it working well and filled the gap created by others exiting from various regions.”
Although they do advise the banks own private clients, Bank of America is at heart an asset lender in the world.
“I prefer Bank of America as they are looking to do a deal rather than just support their own clients,” says one panelist. “This year they really cracked it.”
Best Private Bank for Business Jet Finance 2013: Credit Suisse
Credit Suisse scored even more highly than in 2011, when it was also the winner of this category.
The bank has closed a lot of deals for European and Russian clients for a number of year but in the past few years it has expanded and now offers finance throughout the world apart from in North America.
As one of Europe’s largest private banks, Credit Suisse’s network of private bankers creates many opportunities to bid on a wide range of transactions for the bank’s clients. It is also willing to offer business jet finance to individuals with whom the bank would like to have a relationship.
“I rank them as absolutely the finest at dealing with ultrahigh net worth individuals,” said one panellist. “They really understand them and the transactions.”
Most Innovative Financier 2013: Export-Import Bank of the United States and Airfinance
The Export-Import Bank of the United States (US Ex-Im) is sometimes dubbed “Bank of Boeing” because of its strong support of commercial aircraft exports. However, for several years it has been looking for ways to support business aircraft exports and the related jobs at American aircraft factories.
It partly achieved this with two facilities for Cessna Finance Corporation. But it was hard for its already stretched transportation team to do more, because demand for support for Boeing also increased at the same time.
Single business jet deals took the same time to structure as large commercial aircraft deliveries that could easily be 10 times larger. And the credits were more complicated.
In May 2012 at the European Business Aviation Convention and Exhibition (EBACE) Fred Hochberg, chairman and president of US Ex-Im announced the launch of the Qualified Adviser Scheme. Private sector organisations would outsource due diligence and credit analysis for the bank speeding up the approval process – one of the biggest criticisms of business jet export credit deals.
“We want to offer government at the speed of the business,” said Hochberg. “We want to provide financing in a real time way.”
The first qualified adviser was Airfinance, a specialist firm run by Kirsten Bartok (pictured above), former vice president of structured finance and corporate development at Hawker Beechcraft, and Tom Low, former president of Textron Financial and Cessna Finance Corporation. Low has seen the value of Ex-Im whilst at Cessna. Having worked at Hawker, Bartok was desperately aware of what a difference Ex-Im could make for other manufacturers. They worked closely with Ex-Im to conceive the idea.
Low and Bartok also hired senior people from Cessna Finance, including Brent Cox, formerly the chief operating officer, to strengthen Airfinance.
Airfinance works with buyers to prepare applications with Apple Bank providing guaranteed loans once deals are approved by Ex-Im. The first deal under the scheme was approved in 2012 and Airfiannce is now working on other deals.
Ex-Im is also talking with at least two other companies that are likely to join the scheme.
Business Jet Deal of the Year 2013: ICBC Leasing financing of five Global 6000s for VistaJet
Any deal involving a Canadian export credit agency providing debt to a Chinese leasing company’s Irish subsidiary, to finance Maltese registered aircraft, for a Swiss company, deserves credit for simply closing.
The complicated deal involved more than five countries and took over a year to structure. Export Development Canada provided debt to ICBC Leasing’s Irish subsidiary. ICBC Leasing Ireland then leases the aircraft on to VistaJet a Swiss company with the aircraft listed on the Malta aircraft registry.
Because the aircraft were financed through Dublin, ICBC Leasing did not need to get approval from the State Administration of Foreign Exchange of the People’s Republic of China. It can take months for a leasing company to get SAFE approval to lend dollars.
It is also the first time a Chinese financial institution has obtained export credit support under the new OECD Aircraft Sector Understanding rules.
ICBC Leasing, which is regarded as one of the most innovative Chinese leasing companies, signed a memorandum of understanding with Bombardier to provide funding support to the buyers of Bombardier aircraft and rail products in 2011. It was the first Chinese leasing company to finance a business jet in China and recently placed an order for 10 Legacy 650 aircraft.
Several other Chinese leasing companies are looking to replicate the deal using Hong Kong and Irish subsidiaries and it may be repeated for some of the aircraft on VistaJet’s 2012 order for 56 Global jets – worth approximately $3.1 billion. The biggest business jet order ever placed.
African and Middle Eastern Business Jet Financier 2013: Investec
Although now a global bank, Investec started out as a South African leasing company in 1974 and is still very committed to the African continent.
The bank has four aircraft specialists in Johannesburg that focus on deals and it closes transactions all over Africa. The group has close relationships with manufacturers and operators and is seen as a particularly valuable partner as it is prepared to consider countries that many other banks might not. The South African team has closed deals all over Africa including Nigeria, Ethiopia, Madagascar, Mauritius and its home market of South Africa.
“We don’t have a list of countries that we will not consider,” says Humphries. “That is not our approach. We don’t have a checklist of things we are looking for, instead we like to find ways of doing deals.”
Asia-Pacific Business Jet Financier 2013: CIT Aerospace
CIT has a great track record in business jet finance and in 2012 it firmly re-established itself as an important global lender.
Like many financial institutions, CIT had a tough credit crunch and was even forced to seek Chapter 11 protection for one month in 2009. But is has remained committed to both commercial and business aircraft.
In 2011 and 2012 the bank firmly returned to business aviation under the leadership of Mike Kahman. “I would have voted for them last year,” says one manufacturer, “but I was also trying to keep them secret.”
It was by far the highest riser in this year’s poll. Although it won in Asia the bank also scored highly in Europe – where it was active on a large number of Russian and Central European deals – and in its home US market.
“CIT is doing a very good job,” says one rival lender. “They have a smart strategy and are aggressive in their niche. In fact, they are beginning to become a nuisance by winning mandates from us.”
Chinese Business Jet Financier 2013: Minsheng Financial Leasing Corporation
Business jet manufacturers should be grateful that the Chinese government approved bank owned leasing companies just in time for the growth in business jet deliveries into mainland China. In 2008, Minsheng Financial Leasing was one of the first leasing companies approved by China’s financial regulator.
It now has ordered over 100 business jets and helicopters which it then leases to its private bank and corporate clients. Minsheng’s approach is different to other banks. It places bulk orders for aircraft and finds customers – who are usually already customers of the bank to take them. Although this is common with commercial aircraft leasing companies, few business jet financiers are prepared to take the risk of owning an aircraft without a customer in place.
“This strategy would probably not work anywhere else in the world but Minsheng is making it work in China,” says one financier.
The other benefit of Minsheng importing the aircraft is that it allows the bank to defer import duty and VAT – up to 22.85% of the aircraft’s value – over the term of the lease making its product attractive to owners.
European Business Jet Financier 2013: UBS
“Some banks are clearly just in deals for themselves,” says one manufacturer. “With UBS, you feel there is a real three-way relationship between the client, them and us. They do an excellent job and are a real partner with us.”
Focused on existing clients of UBS Private Bank, the team’s portfolio includes clients from Eastern Europe, Asia and the Middle East. UBS also scored highly in the Middle East category.
It specialises in larger aircraft, with deals ranging from $10 million up to Airbus corporate jets and Boeing business Jets.
“As well as being good, they are also nice guys to deal with,” added one on the judging panel.
Latin American Business Jet Financier 2013: 1st Source Bank
South Bend, Indiana is 5,147 miles from Sao Paulo. But despite this distance, 1st Source Bank, headquartered near the border with Canada, wins the Latin American category for the second year running.
The banks has been financing business aircraft for more than 20 years and has a portfolio of over 600. It also scored well in the pre-owned and North American categories.
Focusing on loans between $2 million and $15 million it has a distinct niche in South America where other international lenders tend to focus on larger transactions.
And in 2012, the bank’s aircraft finance team moved 1,344 miles closer to the region, with some of the team now in Miami.
North American Business Jet Financier: PNC Aircraft Finance
In their distinctive polo shirts, PNC Aircraft Finance’s team stand out from suited bankers at trade shows. PNC’s products are also very different. With non-recourse loans that can be arranged in a few days without extensive credit checks the bank keeps things simple. Part of the leasing subsidiary of PNC Bank, the sixth largest US bank by total assets, PNC Aviation Finance offers customers aircraft loans that do not require customer financial disclosure or personal guarantees.
“PNC likes to present itself as very simple and earthy – and it is a clever marketing strategy –but Wayne Starling [the head of PNC Aviation Finance] is as dumb as a fox,” says one rival banker. “It is a very smart bank.”
PNC Aviation Finance closed more transactions in the US than any other bank in 2012. It is also about to take the same product to Canada.
PNC Aircraft Finance is not afraid of being different to other banks. “We are very comfortable with what we offer,” says Starling. “We had a big portfolio going into the downturn and our customer base performed very, very well compared to others that were more credit based. We have been doing this for more than 10 years and we know it works.”
Most of PNC’s aircraft loans are for between $1 million and $15 million, but it will make some exceptions – particularly for existing clients of the bank – and has financed aircraft as large as Falcon 7Xs.
PNC Aviation has an old-fashioned approach to finance. Its loan officers look customers in the eye and then trust them to both repay loans and to look after their aircraft.
“Because our customers are buying aircraft they have the pride of true ownership. They have equity in their aircraft and they look after them,” says Starling. “We underwrite based on character; not financials.”