Finance/Investment

Dubai Aerospace to manage $1.4bn aircraft portfolio

BY Fraser Tennant

In an investment mandate valued at approximately $1.4bn, globally recognised aerospace corporation Dubai Aerospace Enterprise (DAE) Ltd is to source and manage an aircraft portfolio on behalf of one of the world’s largest hedge funds.

DAE’ best-in-class Aircraft Investor Services (AIS) platform has been tasked with managing the portfolio of assets on behalf of the investment fund, the name of which has not been disclosed.

Moreover, the multi-year investment mandate will involve DAE assisting the investor with the capital structure for the acquired aircraft, primarily targeting used narrow-body and wide-body aircraft sourced through DAE’s global relationships in secondary market trading and sale-leaseback channels.

Headquartered in Dubai, DAE is one of the largest aircraft leasing companies in the world. Its leasing and engineering divisions serve over 125 airline customers around the world from its seven locations in Dubai, Dublin, Amman, Singapore and the US.

The addition of the investment mandate will bring DAE’s managed portfolio to over $2.7bn in assets under management (AUM). Coupled with other ongoing projects, DAE fully expects its managed portfolio to grow to its target of $5bn.

“DAE is thrilled to have the opportunity to grow its managed aircraft business by sourcing and managing aircraft for a world-class financial institution,” said Firoz Tarapore, chief executive of DAE.  “We are off to a flying start and have already sourced 25 percent of the portfolio.

“We own more than 300 aircraft and will manage more than 100 aircraft. We maintain an active dialog with 250 airline customers,” he continued. “This scale and relevance combined with our 150-person full-service platform and our industry leading AIS offering is a very compelling value proposition for investors in the managed aircraft space.”

State-controlled DAE made a first-half 2019 profit of $197.1m compared with $195.2m last year.

News: Dubai Aerospace wins $1.4 bln deal to manage aircraft

Global energy investment stabilises, says new report

BY Fraser Tennant

Global energy investment stabilised in 2018 following three consecutive years of decline – spending on oil, gas and coal supply revived, while energy efficiency and renewables investment stalled – according to a new International Energy Agency (IEA) report.

In its ‘World Energy Investment 2019’ report, the IEA notes that energy investment totalled more than $1.8 trillion in 2018, a level similar to 2017. Furthermore, for the third year in a row, the power sector attracted more investment than the oil and gas industry.

The biggest jump in overall energy investment was in the US, where it was boosted by higher spending in upstream supply, particularly shale, but also electricity networks. The increase narrowed the gap between the US and China, which remained the world’s largest investment destination.

“Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies,” said Dr Fatih Birol, executive director at IEA. “But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner energy technologies to change course. Whichever way you look, we are storing up risks for the future.”

Among major jurisdictions, India had the second largest jump in energy investment in 2018 after the US. At the other end of the scale, the poorest regions of the world, such as sub-Saharan Africa, face persistent financing risks. Such regions only received around 15 percent of investment in 2018 according to the IEA, even though they account for 40 percent of the global population.

The IEA report also found that public spending on energy research, development and demonstration (RD&D) falls far short of what is needed. And while public energy RD&D spending rose modestly in 2018, led by the US and China, its share of gross domestic product remained flat and most countries are not spending more of their economic output on energy research.

“Current investment trends show the need for bolder decisions required to make the energy system more sustainable,” concludes Dr Birol. “Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track.”

Report: World Energy Investment 2019

Iconic UK sports car manufacturer acquired by European investment firm

BY Fraser Tennant

One of the most iconic names in the automotive world, Morgan Motor Company has been acquired by Italian investment firm Investindustrial – which has taken a majority stake in the 110-year old British sports car manufacturer.

The financial terms of the transaction have not been disclosed. However, the investment is being executed without financial debt and Morgan will have a positive net cash position upon closing of the transaction.

Founded in 1909, Morgan hand-builds premium sports cars with a classic design in its historic factory in Malvern, UK, which is visited by more than 30,000 people each year. With revenues of £33.8m and a net profit of £3.2m in 2018, the company sells around 700 cars per year. It is also one of the last remaining British-owned carmakers.

“The past two years have been the most successful in our company’s history,” said Dominic Riley, chairman of Morgan. “However, to really fulfil our full potential and secure our long-term future, both the family and management team felt it was essential to bring in a strategic partner – a partner that shares our vision and has the expertise, financial resources and track record of success in the automotive world, to make it happen. That partner is Investindustrial.”

Following completion of the acquisition, the Morgan family will continue to act as stewards for the brand and retain a minority shareholding. And, for the first time in its history, the management team and all employees will have a share of the business.

“Morgan’s handmade British sports cars are true icons of the industry,” said Andrea C. Bonomi, Investindustrial’s chairman of the industrial advisory board. “We have followed the company and seen its progress for some time and see significant potential for Morgan to develop internationally while retaining its hand-built heritage. We share with the Morgan family the belief that British engineering and brands are unique and have an important place in the world.”

The transaction is expected to be completed in April 2019.

Steve Morris, chief executive of Morgan, concluded: “The future is bright for Morgan. We are coming off the back of two record years and now have the best possible owner and partner to take the business to the next level and develop Morgan’s global potential.”

News: Morgan family sells control to venture capitalist group

UK FinTech investment reaches record levels

BY Richard Summerfield

2018 was a record year for the FinTech industry, according to Innovate Finance’s ‘2018 FinTech VC Investment Landscape’ report. Last year saw $36.6bn of venture capital (VC) invested in the sector across 2304 deals – a 148 percent increase from 2017 and a 329 percent increase over five years.  

VC and private equity (PE) investment in the UK’s FinTech sector reached record levels in 2018, up 18 percent year-on-year to $3.3bn. PE investment rose 57 percent to $1.6bn, while venture capital dipped to $1.7bn, ahead of its peers in Europe.

VC investment into FinTech in both China and the US overshadowed and outpaced all other global regions, however. Of the top 15 deals in 2018, over half occurred in the US and a third in China. Combined, China and the US accounted for 80 percent of the world’s 15 largest deals.

China led the way, with $18.9bn invested across 90 deals. The US was the most dynamic and mature market, with $10.6bn invested across 1042 deals, a 52 percent increase in capital invested year-on-year. The UK’s FinTech sector ranked third. Within Europe, the UK continued to dominate, though Germany in second place on the continent saw $716m invested across 48 deals, with third placed Switzerland attracting $328m invested across 40 deals.

“It is very encouraging to see that investment continues to grow in the UK FinTech sector, reaffirming its position as a leading global financial and technology centre,” said Charlotte Crosswell, chief executive of Innovate Finance. “The UK has a unique position across financial services, technological innovation, regulators and government which all play a crucial role in this impressive growth journey. However, we should not be complacent as new challenges lie ahead; we must focus on growing our talent and capital pipeline across the UK, to ensure sustainable and inclusive growth in the future.”

2018 was also a notable year for a number of challengers and banking platforms, including Revolut, Monzo and SolarisBank, among others, which raised record amounts of capital.

Report: 2018 FinTech VC Investment Landscape Report

Network Rail agrees to sell the arches in £1.5bn deal

BY Fraser Tennant

In a £1.5bn deal that will help fund railway upgrade plans, bring major improvements for passengers and reduce funding burden on taxpayers, Network Rail has agreed to sell its commercial estate portfolio to property company Telereal Trillium and investment firm Blackstone Property Partners.

Upon completion of the transaction, Telereal and Blackstone will hold equal ownership stakes and intend to be long-term owners of the estate. Both parties have adopted a ‘tenants first’ approach, cemented in a tenants’ charter, which offers a commitment to engage with all tenants and communities in an open and honest manner.

Network Rail launched the sale of its commercial estate in November 2017. The portfolio consists of approximately 5200 properties, the majority of which are converted railway arches. The sites are being sold on a leasehold basis, with Network Rail retaining access rights for the future operation of the railway.

Proceeds from the sale will help fund the railway upgrade plan, which is bringing 170,000 seats into major cities, 6400 extra train services and 5500 new train carriages – a 30 percent increase in capacity.

“This deal is great news,” said Sir Peter Hendy, chairman of Network Rail. “For tenants it will mean significant commitment and investment, and for passengers and taxpayers it will mean massive, essential improvements without an extra burden on the public purse.”

Both Telereal and Blackstone have long and successful track records of operating large commercial estates across the UK. Telereal will oversee the day-to-day property management of the portfolio.

“The arches portfolio is a unique and vital part of the UK economy,” said Graham Edwards, co-founder and chairman of Telereal. “We are tremendously excited by the prospect of working with its entrepreneurial tenant base.”

James Seppala, head of European Real Estate at Blackstone, added: “The portfolio is unique in the role that it plays in stimulating economic activity, growth and prosperity, in particular among SMEs and local communities.”

Mr Hendy concluded: “This has been a very thorough, detailed and complex process and we are pleased we are now in a position to announce Telereal Trillium and Blackstone Property Partners as the new owners of the commercial estate.”

News: Network Rail sells $2 billion property portfolio to fund railway improvements

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