Avolon, I Squared Capital and ADIA launch new leasing company

Avolon announced an agreement to establish Constellation Aviation, a new aircraft leasing infrastructure investment platform formed through a joint venture with I Squared Capital and a wholly owned subsidiary of the Abu Dhabi Investment Authority (“ADIA”). Constellation will combine long-term institutional capital with Avolon’s established aircraft leasing capabilities to create a scalable investment platform, providing airlines with access to essential fleet capacity and investors with exposure to long-term contracted cash flows. Upon completion of the transaction, Constellation is expected to acquire a seed portfolio of aircraft from Avolon with a current market value of $1.4 billion. The seed portfolio comprises 22 modern, fuel-efficient aircraft with an average age of approximately five years, on lease to 17 airlines in 15 countries. Constellation is expected to scale over time, capitalising on structural trends in the aviation market, including continued growth in passenger demand, constrained aircraft manufacturing capacity and airlines’ increasing reliance on leasing to finance fleet renewal and expansion. Avolon will retain a minority equity interest and serve as Constellation’s exclusive aircraft manager and servicer, leveraging its market-leading leasing, asset management and technical capabilities. Ross O’Connor, CFO of Avolon, said: “We are delighted to announce the agreement to launch Constellation Aviation with I Squared Capital and ADIA. The joint venture will combine long-term institutional capital with Avolon’s leasing, servicing and asset management expertise. Constellation will expand our asset management business and reflects the confidence leading institutional investors place in aviation and Avolon’s ability to originate, manage and service high-quality assets.” Gautam Bhandari, Co-Founder, Managing Partner and Global Chief Investment Officer of I Squared Capital, said: “Aircraft manufacturers’ order books now stretch a decade or more into the future, and airlines rely on lessors with scale and aircraft delivery slots to grow their fleets. Avolon has one of the largest order books with Boeing and Airbus and thus enjoys significant benefits of scale. Partnering with Avolon gives Constellation immediate access to a modern aircraft portfolio and a proven origination and servicing platform. Together with ADIA, we look forward to building Constellation into a leading aviation infrastructure leasing platform.” Khadem AlRemeithi, Executive Director of the Infrastructure Department at ADIA, said: “Aircraft leasing is a resilient and growing sector supported by strong structural demand for modern aircraft. The Constellation platform brings together two like-minded investors with one of the world’s leading operators to meet that demand.” The transaction is expected to close subject to securing the necessary regulatory approvals. The joint venture will be supported by a syndicated debt facility provided by a group of leading international banks. BNPP, CACIB, SocGen, ING, MUFG and Mizuho are acting as Joint Lead Bookrunners, and Mizuho is acting as financial advisor to the investors. Milbank LLP acted as legal counsel to the investors and Clifford Chance acted as legal counsel to Avolon. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]