Samsung Partners has launched a new independent aircraft investment firm - Samsung Aviation Partners – which appears to be focusing on “liquid” narrowbody aircraft.
The new kid on the block will offer operating and finance lease solutions; senior, mezzanine and equity financing; PDP Financing; sale and leaseback transactions; as well as freighter conversions.
Samsung Aviation will be based in Ireland, although its focus will be on Korean investors. It aims “to provide innovative bespoke solutions” to the industry and to guide its Korean-based clients.
The start-up explains that it wants to differentiative itself from other platforms in Korea, which it says “have often invested on the basis of being able to meet the reward requirements during a first lease period” only.
“We are highly focused on future values and what happens after a first lease. We will manage the process directly even if we work with other managers. Our aim is to provide our investor clients with a full risk assessment and avoid any conflicts, utilising third party managers in expensive and evergreen contracts with few rights,” says Samsung Aviation.
The new lessor says that “the Korean investor market has been viewed as naive and taken advantage of”, citing existing players’ involvement in Airbus A380, A330 and Boeing 777 financing and leasing.
“The Korean investor’s strategy of widebody aircraft to flag carriers has merits, but expensive and illiquid assets come with other risks if the airline customer does not extend and the exposure at lease end is high,” Samsung Aviation says.
It adds: “Those investors who have participated in A380, 777 and A330 investments will likely pay a high price for the gains earned during the initial contracted lease. Many Korean investors will lose substantial equity having invested in illiquid assets. They have failed to understand the strategies of the airlines they have worked with; even when those airlines have been top-tier carriers.”
The new lessor adds that Korean investors have “learnt the hard way” that aircraft appraisals can be inaccurate. To address this, Samsung Aviation says “it will not rely on the services of third parties”.
The new platform has no affiliation to the Samsung electronics conglomerate.
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