The deal likely allows AIP and Monroe to book larger profits, free up their own capital to grow scale, and by proving their ability to exit to secure larger warehouse facilities.
18 planes leased to airlines across 10 jurisdictions
The deal is backed by 18 passenger aircraft leased across 10 jurisdictions.
AIP and Monroe partnership business model
AIP and Monroe formed a partnership in the middle of last year where Monroe, as a large private credit firm, brings capital, and AIP, as an aircraft investment specialist, brings its aircraft leasing expertise.
They had announced that they were looking to invest $1 billion in mid-life aircraft on long-term leases to airlines globally.
They had said that Monroe would provide the investment capital, and AIP would act as the servicer of the assets.
They had secured commitments from Deutsche Bank and Fifth Third for a $500 million asset-backed warehouse facility.
Securitization creates access to low-cost capital at scale
The securitization transaction provides AIP and Monroe with an ongoing low-cost financing option that is likely to allow them to expand their business in this area.
More managers likely to build aircraft financing businesses
We expect more private credit and bank investors to build aircraft financing businesses as competition for mainstream assets grows, as some historical destinations (like many type of software company) for private credit capital shrinks, and returns in their historical asset classes fall with increasing competition. Building sector expertise can provide a valuable barrier to entry in some cases. Managers looking at this sector may look for partnerships with aircraft financing specialists, as Monroe has done here, or may look to build a team in house. Before founding AIP in 2023, one of the co-founders – Mathew Adamo – was MD, Aviation Investing at Castlelake, and before that he was CIO at global aircraft lessor Jackson Square Aviation.