Avolon launches IPO

Dino D'Amore
By Dino D'Amore December 1, 2014 21:23

Avolon launches IPO

Avolon Holdings has launched its initial public offering of 13,636,363 common shares. The initial public offering price is currently expected to be between $21 and $23 per share, which would result in a total offering size of between $286 million and $314 million. All of the common shares are being offered by the selling shareholders. The selling shareholders have granted the underwriters an option to purchase up to 2,045,455 additional common shares to cover over-allotments, if any. Avolon will not receive any of the proceeds from the offering.

Avolon has been approved to list its common shares on the New York Stock Exchange under the symbol “AVOL”.

JP Morgan, Morgan Stanley, Citigroup, UBS and Wells Fargo are acting joint book-running managers.  Co-managers are BNP Paribas, Cowen & Company,  Credit Agricole-CIB, DBS Bank and Natixis.

Click here for the offering prospectus

Meanwhile, Ablrate.com launched this summer which is the first peer-to-peer (P2P) asset lender prepared to invest in aircraft leasing. The company is focused on ATR aircraft, which are ideally suited to this form of financing since regional airlines tend to buy in small quantities making funding such deals less attractive as an investment proposition for commercial banks that may demand more collateral. Ablrate offers fixed loans and auction from borrowers that could be established lessors or national airlines. The company currently has 180 active investors on its platform. The aircraft on the platform are managed by Phoenix Aircraft Leasing. Ablrate raised £100,000 to fund one ATR-42 owned by Phoenix to be leased to a government-owned Latin American airline, which carried an interest rate of 10%. Dependent on the level of risk, this could increase to as high as 13%.

Ablrate was born when CEO David Bradley-Ward realized mezzanine finance secured from a bank was very expensive for a small transaction and he realized he could provide good returns to investor for that level of finance and more competitively than a bank.

“Aircraft are an evocative asset as well as a lucrative one,” Bradley-Ward said, “and with the advent of peer lending, we are able to offer everyday investors, asset managers and institutions unique access to this asset class. Thanks to the partnerships we’ve built up with leasing firms like Phoenix and DS Finance and Leasing, we’ve been able to secure a high quality and well stocked deal pipeline, covering both aircraft and capital equipment.”

Bradley-Ward predicts a deal pipeline of £50 million in 2015 rising to £100 million by the end of 2016.

Airline shares have been buoyed by the news that the price of crude oil has fallen to $68.  In India specifically Jet Airways and SpiceJet shares climbed 6.5% and 13%, respectively, on after jet fuel prices were cut by 4.1%.

SpiceJet shares have also been given a lift on the news that investor Rakesh Jhunjhunwala has bought a stake in the airline. Even so, the airline remains in dire straits. The Indian low-cost carrier has delayed salary payments and is continuing to operate a truncated schedule with a large number of flights cancelled due to aircraft being taken back by a number of lessors.

SpiceJet COO Sanjiv Kapoor told employees: “For certain technical reasons that cannot be described in an email (but related to ongoing restructuring, recapitalization, and balance-sheet clean-up related activities), salaries are delayed approx one to three working days, depending on pay grade…. While we tried our best to avoid it, this is the first time ever that there has been any delay in salaries at SpiceJet. This will also be the last time salaries will be delayed at SpiceJet.”

Dino D'Amore
By Dino D'Amore December 1, 2014 21:23