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Feature: The private equity exit

13 May 2011

What expectations are driving the new breed of leasing companies, and can they deliver?

Read more: private equity lessors Jackson Square Aviation Indigo Partners Terra Firma Awas HKAC

This time last year the talk was of new money discovering aircraft leasing. Since then, more than $4 billion came from private equity alone. But there is no such thing as a free lunch.

Private equity investment in aviation is changing the game. Now lessors, with their backing, can focus on new aircraft deliveries, long-dated leases, and stable cash flows - building toward an initial public offering (IPO) or a trade sale at the top of the cycle.

Two startups have been particularly successful raising capital in the private equity arena. Avolon and Air Lease Corporation (ALC) have raised $1 billion and $1.3 billion, respectively, from private equity shareholders since establishing their businesses last year.

The private equity/lessor dynamic is important because the proportion of the global fleet that leasing companies are financing is increasing as the number of yearly deliveries grow.

In 2004 there were about 500...

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