DAE Capital, which has been in the market for a portfolio, has agreed to buy Nordic Aviation Capital in a deal that will increase its portfolio to 750 owned, managed and committed aircraft and propel the lessor to the top five, based on the number of assets, according to Airfinance Global’s Leasing Top 50 ranking.
If the deal had closed a year earlier, the move would have ranked DAE as the second-largest lessor by fleet size, trailing only Aercap and surpassing SMBC Aviation Capital with 720 assets, based on the Top 50 2024 report. (Airfinance Global will release an updated version at the end of the first quarter).
DAE currently owns, manages, and is committed to owning a total of 500 aircraft, including 215 from Boeing.
In October, DAE’s chief executive, Firoz Tarapore, declined to comment on Airfinance Global’s report on 29 October that DAE was one of the final bidders for the Nordic Aviation Capital portfolio.
“We don’t comment on any ongoing transaction,” he said, adding that DAE has not changed its policy of assets underwriting. “The assets we underwrite in our portfolio, we have been crystal clear in communicating that our underwriting envelope is very strict… We have no reason to change our underwriting envelope at this stage.”
Following a nearly year-long sales process, the lessor entered a definitive agreement to acquire 100% of NAC’s group of companies in a move it said would add “complementary market presence”. The pro-forma fleet will have a total value of $22 billion.
People familiar with the talks tell Airfinance Global that a full perimeter sale was an essential sales condition for NAC’s chief executive, Norm Liu, throughout the campaign, which it aimed to complete by year-end 2024. However, as previously reported by Airfinance Global, any delays could prove temporary, with the upcoming Dublin aviation week the ideal gathering to reveal a new shareholding.
Commenting on the sale, Tarapore said: “We are delighted at this opportunity to add NAC’s capabilities… and people to our platform. This transaction will allow us to provide more cost-effective solutions to a larger group of customers.”
The lessor remained an interested party and bidder from the very start of the Goldman Sachs-led process, which included three rounds of bids, as revealed by Airfinance Global.
And despite a group of finalists, sources indicate that sales talks remained fluid, with all interested parties remaining in the running until the end of the campaign.
DAE said the transaction will be “appropriately capitalised” and funded by internal resources and committed debt financing, noting that its leverage and funding metrics will remain “comfortably within” the levels consistent with its credit ratings.
In 2024, DAE continued to bolster its financial position. It signed an AED2.75 billion ($749 million) five-year unsecured term loan with Emirates NBD Bank acting as debt arranger. It also brought a $497.2 million two-tranche aircraft asset-backed securitisation to market through a joint venture with DAE affiliates and funds managed by Pacific Investment Management Company (PIMCO).
Also, DAE’s unsecured ratings were upgraded by Fitch Ratings and Moody’s Investors Services to BBB and Baa2, respectively, in 2024.
The sale is subject to required regulatory approvals and shareholders’ approval. It is expected to be completed in the first half of 2025.
The deal includes NAC’s fleet, which comprises 252 owned and committed assets on lease to approximately 60 airline customers in 40 countries.
No doubt, NAC’s fleet of 128 ATR aircraft is of interest to DAE. According to NAC’s annual report, the lessor has orders for 16 additional ATRs. DAE owns and manages 66 ATR72-600 units.
Dry spell
Last year, DAE reviewed the Sky Leasing V portfolio, and before that, it walked away from the Vmo Aircraft Leasing sales process after the parties could not agree on an adjustment related to the closing price.
The lessor has repeatedly commented that an investment in the M&A market must fit its strategy.
“For us, it will be kind of more the same when we look at all four channels: trading, sale and leasebacks, M&A or OEMs, and opportunistically meaning to each of those that is the most relatively attractive for the investment horizon we are looking at.
“We have stated that scale is one of the measures we look at across our owned, managed and committed fleet. Given our propensity in that space, we are naturally included in a lot of the transactions that go on,” said Tarapore last May.
DAE was advised by Allen Overy Shearman Sterling and KPMG.
Clifford Chance advised NAC.
DAE finds scale with NAC purchase | News | Airfinance Global
Laura Mueller