Arcano Partners launches new investment strategy focused on air transport assets

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Singapore-based Mystifly

https://www.ses.ie/Arcano Partners has launched a new investment vehicle specialising in transportation assets with a particular focus on the global aviation sector. Specifically, the firm has developed this new private equity investment vehicle, Arcano Aviation Fund, PEF whose strategic focus is to invest in long-term income assets with strong performance counterparties. These assets are characterised by their long lives, their de-correlation to other traditional financial assets, as well as the generation of stable and predictable cash flows.

The new fund has a fundraising target of approximately 100 million euros and is aimed primarily at institutional investors and private banking clients. In addition, the possibility of incorporating other complementary vehicles is also envisaged, so that the total investment could reach up to €150 million. Andbank will participate in the distribution of the Fund among its private banking clients.

The Arcano Aviation Fund, FCR will be managed by a team specialised in transport asset finance. This group of experts has extensive experience in the full investment cycle managing and structuring the investment of over €1 billion of capital with an asset value of approximately €5 billion in the transport sector. Its most recent experience includes investing in a diversified portfolio of 12 commercial aircraft leased to leading international airlines such as Delta Airlines and Qatar Airways.

Despite being one of the sectors that suffered the most during the Covid-19 pandemic, it has also been one of those that has recovered the best, especially in these last months of 2023 where it has become clear that it is a resilient sector that already exceeds the levels of demand recorded in 2019.

The long useful life of these real assets (more than 25 years) and their ability to move to any part of the world to continue their operation make them a predictable asset with very stable cash flows over the long term. Likewise, they have historically shown a very uncorrelated behaviour with respect to other more traditional assets.

The current context, marked by delays in the global supply chain, has led to a deferral of aircraft deliveries to airlines and lessors, which in turn has strongly supported asset valuations, thereby improving the collateral they provide for these investments. Despite the timely delay, the outlook for aircraft fleet growth is very positive and is expected to double over the next 20 years to more than 46,500 by 2042 according to figures provided by the two main manufacturers Airbus and Boeing.

Jon Garaiyurrebaso, Managing Partner of Arcano Asset & Capital Finance, has indicated that “investment in this type of assets is increasingly in demand among investors. Arcano Aviation Fund, FCR will follow a conservative investment strategy based on (i) geographic diversification, by asset type and counterparty, (ii) by the selection of liquid assets and (iii) the search for solid long-term counterparties.”

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