SOURCE: FLIGHTGLOBALBY: LAURA MUELLER LONDON
A pullback in the financing market, prompted by tighter global financial regulation, is what the Development Bank of Japan (DBJ) is banking on will help secure demand for its new established aviation fund with Novus Aviation Capital.
“When we entered the market in 2011, we realised there is growing potential for mezzanine financings in this space, as we expect financings will become more expensive and loan to values will decrease as a result of increased regulation,” says Masao Masuda, director at DBJ in an interview withFlightglobal.
He adds: “Airlines and lessors will still need support even though there could be a tighter pool of investors due to more regulation. We are seeking to help fill any gaps with high-risk, high-return mezzanine capital.”
The fund, Tamweel Aviation Finance, is expected to target new Airbus aircraft, particularly widebodies such as the A330.
While Masuda would not be drawn on the amount of the fund, market sources indicate an initial investment of ¥10 billion ($101 million) is likely. Masuda says further funding from Asian institutional investors is possible later this year.
According to Masuda, DBJ had been looking at entering the mezzanine market for some time, but with an experienced partner.
“We found that in Novus, which has been in the market since 1994 and manages a $2 billion portfolio,” he says.
DBJ already provides mezzanine financings for other asset classes such as real estate, so aviation is a natural extension of the bank’s lending activities, says Masuda.