- Aircraft leasing jet portfolio rises by $500 mln
- Firm ending 2016 with 127 aircraft, up from 80
- Apollo Aviation prices $1.15B in asset-backed securities
Apollo Aviation Group is capping off a busy 2016 in which the aviation-investment manager increased its aviation assets under management by $500 million to about $3.1 billion after floating two asset-based loans.
Founded in 2002, the firm specializes in midlife and older aircraft that it buys in the secondary market. The firm typically owns Boeing and Airbus aircraft on or off lease and manages them or holds them in lease portfolios that generate a return.
American Airlines, Virgin America and SpiceJet are its three largest lessees by value as it relates to asset-backed securities, a recent note on the firm from Kroll Bond Rating Agency says.
In October, Apollo Aviation priced a $640 million asset-backed security, Apollo Aviation Securitization Equity Trust 2016-2. And in March, the company priced the $510 million asset-backed Apollo Aviation Securitization Equity Trust 2016-1.
Robert Korn, co-founding principal and president of Apollo Aviation, said the firm went back to the ABS market for a second time in 2016 to finance aircraft purchases because the time was right.
“We’re an opportunistic buyer of equipment,” Korn said by phone. “We had what we felt was the right size portfolio that we thought would be received well. It’s been a good way to permanently finance what we acquire.”
At last check, the firm, with offices in Miami, Dublin and Singapore, owned 127 aircraft — including aircraft contracted to purchase — up from 80 as of Dec. 31, 2015.
“As we find opportunities to deploy capital, our capital-market team has done a great job of constructing portfolios that have been received very well by debt investors,” Korn said. “We’re not using [the ABS] as a portfolio sale; it’s an asset-financing structure.”
With its ABS transaction in October, Apollo used proceeds from the loan sale to purchase a fleet of 35 aircraft, leased to 22 airlines in 20 countries, according to Kroll. The portfolio had an initial value of about $792 million.
The firm also closed its third private equity fund, SASOF III, with $833 million in October 2015. Korn declined to comment on fundraising.
Korn co-founded the firm in 2002 after he’d been a vice president of marketing at Pegasus Aviation. William Hoffman, co-founding principal of the firm, was the managing partner of Hoffman & Hoffman, a law firm, from 1992 to 2002.
Correction: This article was updated to correct information in the first paragraph about the firm’s assets under management, and in the third paragraph about the firm’s three largest lessees by value as it relates to asset-backed securities.
Action Item: Contact Apollo Aviation: http://apollo.aero/#apollo-aviation-contact
A Virgin America plane is shown on final approach to landing in San Diego on April 4, 2016. Photo courtesy Reuters/Mike Blake