Doric Nimrod Air Two Issues £200 Million of Shares to buy four more A380s

By Victoria March 27, 2012 13:08

Doric Nimrod Air Two Issues £200 Million of Shares to buy four more A380s

Nimrod Capital and Doric Asset Finance have succeeded in listing of a further £200 million of C shares on the London Stock Exchange today under the Doric Nimrod Air Two Limited (DNA2) vehicle.

DNA2 now has a market capitalisation of £360 million. It aims to pay a quarterly dividend equivalent to 9% per annum (based on the issue price of 200 pence per share) following the purchase and leasing of a further four Airbus A380 planes to Emirates, in addition to the three it contracted to buy last year. DNA2 shares are now trading at 221 pence compared to the launch price of 200 pence.

DNA2 will altogether own seven Airbus A380s and will lease them to Emirates, each for a period of 12 years from the point of delivery, reflecting the development of a sizable aircraft financing platform. Upon leasing of the planes, DNA2 will aim to pay a dividend of 4.5p per quarter per 200 pence share. Under the terms of the lease, the airline is responsible for insurance and all other service, maintenance and repair costs.
In addition to the regular yield of 9% per annum, once the lease has expired, the aircraft are likely to be sold and investors paid out from the residual value.

The UK’s first aircraft investment company, Doric Nimrod Air One Limited (DNA1), listed in December 2010, investing in one Airbus A380 leased to Emirates, was followed by DNA2, which came to market with an initial market capitalisation of £145 million in July 2011. Both investment companies bring an investment strategy that has proven very successful in Europe, to the UK market. The asset manager, Doric Asset Finance, has a long and successful track record in managing aircraft investments.

Investors in DNA2 are mainly institutional asset managers, pension schemes, and private wealth managers, attracted by the profitable business model of the lessee, Emirates, as well as by the Airbus A380, which, as the world’s largest state-of-the-art passenger aircraft, offers unbeatable per seat economics and passenger comfort to match.

“In the current low yield environment, we believe this investment opportunity should continue to prove most interesting to UK investors, looking for high income investments, backed by real and stable assets, which also can provide a hedge against inflation,” said Marc Gordon, Partner at Nimrod Capital, the specialist investment firm which organised the listing of both deals together with Doric Asset Finance.
“The A380 is an iconic aircraft. Customers want to fly it and its cash-generative economics are unbeatable for the operators. This transaction is a strong vote of confidence in Emirates and the A380,” commented Mark Lapidus, Managing Director of Doric Asset Finance.

The shares of DNA2 and the new C shares are listed on the London and Channel Islands Stock Exchanges.

Herbert Smith acted as legal advisors to the investment company.

This latest share issuance by DNA2 was oversubscribed and may not be the end of increases for the vehicle. Although there are no immediate plans to add more aircraft to the company, under the terms of the original prospectus there is a grace period of two years where more shares can be issued up until July 2013. Even after that, there are many other options open to the company – it could merge with DNA1 for example or even acquire other companies to achieve better economies of scale and better returns for shareholders. Again, this vehicle has demonstrated the innovative structures created by the aviation finance community and the investor demand for tangible and secure assets.

By Victoria March 27, 2012 13:08
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