FlyHouse scores Benevolent Capital

opinion

by Alasdair Whyte

October 15, 2024

Ipswich Town Football Club shares investors with FlyHouse

Ipswich Town Football Club is not one of England’s best-known teams. It should be. The so-called Tractor Boys have a better story than Ryan Reynolds’ Wrexham experiment or Ted Lasso’s Richmond FC.

The club was a top team in the 1970s and 1980s. But then it struggled and ended up in the third league of English football. In 2021 Benevolent Capital, a US investment firm named after a street in Providence, Rhode Island, arranged a buyout of the club. It helped them hire a brilliant young manager and he got the team promoted two years running. It is now back in the Premier League.

Founded by twin brothers, Benevolent Capital is best known for its football investments having also backed Phoenix Rising FC and now Rhode Island FC. But it is more active in private equity, venture capital and property. One of its stand-out deals was a $200,000 seed capital investment in Enzymatics, a bio-tech start-up. This generated more than $30m in total returns.

It has now closed its first business aviation investment, choosing FlyHouse, the aircraft management and charter company.

“FlyHouse had already closed its capital raise, but when they expressed interest, it was something we couldn’t ignore. Benevolent has a track record of going beyond the spreadsheet and realise that it is about the people in the business. Their motto has been that they invest in the who and not the what,” says Suran Wijayawardana, chief aviation officer, FlyHouse. “We are extremely excited with Benevolent as they are an incredible cultural fit, bring great energy and expand our reach.”

FlyHouse launched three years ago offering an innovative profit-sharing aircraft management scheme and a few months ago launched its charter marketplace. This was helped by the acquisition of JetASAP, an online charter platform. Wijayawardana says it now has 10 aircraft in its managed fleet and 1,000 on its charter app.

He says that the while public shareholders may have lost their enthusiasm for business aviation following the SPAC boom, private equity is still available. “Recent performance of SPAC acquisitions may contribute to diminishing confidence in aircraft operators, we want to change this,” he says.

Airshare, the fractional operator and aircraft manager, also showed this when it closed a deal with Kansas private equity firm Kompass Kapital in the summer. It had been looking for investors for two years but chose to put its fundraising on hold while it acquired Wheels Up’s aircraft management business. It used its own cashflow for the deal and John Owen, president and CEO, wanted to focus on integrating the Wheels Up division.

“The integration has gone well. It was not just a strategic fit but also a cultural fit,” says Owen.

When the Kansas-city company returned to looking for investors it looked down the road to Kompass Kapital. Like Benevolent, Kompass is happy holding onto investments for longer than the standard four to-seven years that many private equity firms prefer. “It is a lot easier when your investors feel like the right partners,” says Owen.

The company is using Kompass Kapital’s investment to buy more aircraft for its fractional business, hire people and invest in technology. He is not rushing to do other acquisitions. “We are not looking to grow for growth’s sake,” he says.

Airshare was a beneficiary of the rise and fall of SPACs. Wheels Up acquired four significant management companies – TMC Jets (2019), Gama Signature Aviation (2020), Mountain Aviation (2020) and Atlante Air (2022) – before going public. Airshare paid a fraction of the amount that Wheels Up had to buy these.

Ipswich Town has had a slow start to life in the Premier League in the first few weeks of the season. It is still chasing its first win. But after a 22-year break its fans would be happy just staying in the league this year. They are still feeling very benevolent towards their investors.