Dow Jones’ Private Equity Analyst – By Daniel Hausmann
Dublin — Jordan Co. is leading a $500 million investment in new aircraft-finance business Milestone Aviation Group Ltd.
Nautic Partners LLC also is investing in the deal. The specific breakdown of ownership stakes hasn’t been disclosed.
Richard Santulli, chairman of Milestone, was a co-founder of NetJets Inc. The company’s chief executive, William Kelly, was previously chief executive of NetJets Europe. Santulli, Kelly and others started putting Milestone together over seven months ago.
They met with a number of private equity firms and settled on Jordan and Nautic, Santulli said. He said he has known Jordan Chairman John Jordan for over 20 years.
The company will focus on providing financing for helicopters and private jets–a contrast from earlier private equity deals in aircraft leasing that focused on commercial planes.
“We know a lot about private jets, we know a lot about helicopters,” Santulli said. “This is more of a relationship deal.”
And in another difference from other leasing businesses, the company won’t acquire a bulk of equipment and attempt to lease it out. Milestone will work with customers on selecting aircraft, acquire those planes and helicopters, and then enter into lease deals with customers. Kelly estimated the company could own $3 billion to $4 billion in assets in the next five to six years, with expected debt financing.
The customers would operate the leased aircraft and bear operating costs. Milestone targets operators at the small-to-medium-sized space that may not have the balance sheet freedom to finance the purchase of aircraft but need to compete with larger operators, Santulli said.
Jordan officials weren’t available for comment.
In the last eight months, there has been a flurry of activity in the aircraft sector. Carlyle Group and other investors committed $600 million behind RPK Capital Partners, a newly formed aircraft-leasing company. CVC Capital Partners, Cinven Group Ltd. and Oak Hill Capital Partners combined to put $1.4 billion, including debt, behind Irish aircraft-leasing company Avolon. Oaktree Capital Management LP committed $500 million to Sky Holding Co., a new venture in the space, late in 2009.
Nautic officials couldn’t be reached for comment.
Milestone, of Dublin, was advised by Credit Suisse Securities LLC, Clifford Chance LLP and Proskauer Rose LLP. Jordan was advised by Mayer Brown and Winston & Strawn LLP.
Reach Jordan Co. at 212-572-0800; Nautic Partners at 401-278-6770.