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GIC injects $300m into aircraft lessor Avolon

28 Oct 2011

Singapore sovereign wealth fund GIC is set to inject $300m of equity into Avolon, the Dublin-based aircraft leasing company owned by global private equity firms CVC, Cinven and Oak Hill.

Avolon has raised $600m in debt within the last three months, bringing its total loan facilities to $2.6bn. The private equity trio agreed to finance the start-up for $750m last year, acquiring an equal share in return.

Avolon has since attracted more than $4bn in debt and equity, which has enabled it to finance a fleet of 88 aircraft, with 26 clients in 18 countries including Ryannair and AirAsia. In total, $1.4bn of this has come from equity commitments from GIC and the buy-out firms. This round of funding will enable the company to ahceive its target fleet size of 150 aircraft, valued at $6bn, by 2014.

The stake was bought from Irish financier Domhnal Slattery, who set up the company to capitalise on the trend for aviation companies looking at leasing options because they are struggling to buy new aircraft.

Slattery said, “We are delighted to welcome the Government of Singapore Investment Corporation as both a strategic and capital partner in our business. GIC is one of the leading and most respected sovereign wealth funds in the world and their decision to make this significant investment in Avolon is a clear endorsement of the scale and quality of our franchise and the strong growth potential of the aircraft leasing sector.”

The Asia-Pacific region, where 34 per cent of the Avolon fleet is currently placed, is strategically important to the company. It is estimated that around half of the world’s air traffic growth over the next two decades will be driven by travel to, from and within the Asia-Pacific region. To support this growth, it is estimated that airlines in the region will need more than 11,000 new aircraft, worth $1.5tr, over the next 20 years.

Recent news reports also confirmed that GIC and a consortium of investors including Canadian buy-out firm Onex are the last remaining bidders for the private equity arm of European insurance giant AXA.

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