Bahrain-based investment bank, Capital Management House (CMH), in partnership with Novus Aviation and Muzun Partner Ltd has acquired a Boeing 777-200ER airliner from Emirates Airlines.
According to the terms of the agreement, the aircraft, fitted with Rolls Royce Trent 8900 engines, will be leased back to Emirates for a fixed six year-term.
The lease agreement will be managed by Geneva based Novus Aviation Services, CMH’s partner in the transaction and a specialist in aircraft sourcing, trading, leasing and other related services. Financing for the acquisition was provided by the London branch of DVB Bank, one of the largest transportation finance banks in the world, with Trowers & Hamlins acting as the legal advisors and Avitas having conducted the valuation and inspection of the aircraft.
“We are delighted to close another transaction in the region’s transportation sector, where we see opportunities to acquire income yielding assets that will not only provide CMH and our strategic investors with strong potential for capital appreciation but, importantly, recurring and sustained income streams,” Khalid A. Al Bassam, Chairman of CMH, said.
“Aviation has shown to be a resilient sector and leasing a lucrative sub-segment with relatively limited downside risk. We are pleased to conclude this acquisition and leasing agreement with Emirates, one of the world’s leading airlines. We continue to look for ways to further diversify our portfolio in promising sectors and asset classes such as this and as seen in our steady flow of recent deals in the logistics and transportation space including the recent purchase in December 2010 of a 30% stake in Skaugen Gulf Petrochem Carriers, a GCC-based petrochemical shipping company. CMH is targeting to replicate such transactions throughout 2011 and has a strong pipeline of opportunities for our investors in these and other sectors in the year ahead,” he added.
Within the aviation industry, the operating leasing segment has grown significantly in recent years with expectations for further growth both in absolute and relative terms expected to continue. These factors serve to position aircraft as real and mobile assets, which offer opportunities for relatively high absolute returns and downside protection as a result of their ability to generate stable and predictable cash flows from reputable airlines. The Boeing 777-200ER in particular is considered one of the most high-demand wide body aircraft models on the market and is currently in use amongst 39 operators worldwide.
“This transaction marks Novus’ long-term commitment to growing its aircraft leasing investments in partnership with prominent institutions such as CMH. Working together, we look forward to building on the success of this leasing agreement with Emirates and adding further quality aircraft assets to be leased to other top-tier airlines in the coming months,” Safwan Kuzbari, President of Novus, added.
“This acquisition underscores CMH’s continued focus and strategy of building a strong and diversified income yielding portfolio, said Khalid M. Najibi, Managing Director of CMH.
“Having partnered with Novus, a market leader in the aviation leasing industry, we are confident that we are well positioned to effectively leverage this asset and generate strong and stable cash flows from our investment. We are further pleased to be in the position to offer our clients this unique opportunity that allows them to gain exposure to the aviation industry at such an opportune time. We believe this is the right point to deploy capital and make investments in this cyclical industry, which is poised to benefit and grow as a result of the expected economic upturn in the region and the resumption of air traffic growth worldwide. We are currently in the process of structuring a product that will enable our investors to participate in the deal during the first half of 2011 and will continue to structure similar transactions with other government owned airline companies in the GCC.”