Stellwagen Capital has four more transactions in the pipeline after closing a first deal via its senior loan investment vehicle.
Chief executive Howard Millar puts the value of deals in the pipeline at $400-500 million. "If I had the cash today, I could lend that," he says.
StellCap, Stellwagen's 10-year closed-end fund, locked down an initial round of funding last year, raising $250 million.
It is hoping to raise an additional $200 million by October. The fund is targeting overall returns of 8-10%, including leverage, and has a mandate to raise up to $5 billion.
StellCap is making an asset play, focusing more on aircraft type than on the borrower's credit, Millar tells FlightGlobal. In the low-return environment, where bank margins are being squeezed tighter than ever in aircraft finance, StellCap is stepping in where banks have pulled back when it comes to supporting weaker credits. The company will work with mid-tier credits rather than top-tier airlines and lessors that can squeeze costs of funding lower.
Additionally, Millar notes that a balloon structure, as opposed to a typical paydown loan, allows the financier to charge a higher premium.
"Ultimately our plan is to trade the loans – like a CLO [collateralised loan obligation]," he says. StellCap will build a book of loans and then package them together into a senior secured aircraft trust certificate that can be sold on to banks and investors. "This is the secret sauce that allows us to generate those returns," adds Millar.
Source: Cirium Dashboard