Guggenheim Aviation Partners is due to complete fund-raising for its second aviation fund - Guggenheim Aviation Investment Fund II (GAIF II) -n the ballpark of $600-750m on 28 September. The total funding is a huge leap from GAP’s first fund, Guggenheim Aviation Investment Fund I (GAIF I), which totaled $277m.
Although the markets are far from ideal for fund raising, GAP president and CEO, Steve Rimmer, says current market uncertainties actually have helped the company this time around.
“It’s never easy to raise money, but with the track record of fund one, it was a little easier,” says Rimmer. “People view our strategy as a safe one, in an unsafe sector, and we don't rely on high leverage, capital markets or strong IPO markets to either make our deals work or provide an exit.”
Rimmer says GAP has previously used its own private equity sales group within the parent, Guggenheim Partners, but this time, it also struck up a relationship with a bank and a European entity for specific markets. The name of the companies cannot be disclosed until after the official final closing of the fund, said Rimmer.
GAIF II was formed in September 2006 and has 26 aircraft owned or under contract (six 747-8Fs, four 777Fs, six A330-200Fs, three 767-300ER, two 737-700s, one 737-500 and four 737-300s) and holds options to purchase three additional aircraft.
The wind down of the first fund is underway and Rimmer expects the final sales to be complete by the end of October. The majority of the portfolio was sold to Aircastle, which agreed to purchase 38 aircraft valued at approximately $1.595bn in January. The aircraft include 12 freighters: four 747- 400ERF freighters to be delivered new from the manufacturer, seven 747-400 aircraft converted or to be converted to freighter specification, and one MD-11F. The remaining 26 aircraft are passenger aircraft, several of which are scheduled for freight conversion.