Arcano Partners launches new investment strategy focused on air transport assets

Editor -
  • The fund manager has registered a new private equity fund focused on investing in aviation assets with a target fund size of EUR 100 million. Potentially, other parallel investment vehicles are expected to be added to bring the total volume of the strategy to €150 million;
  • Arcano has incorporated Miguel Cacho and Javier Hidalgo to launch this new investment strategy. Both have extensive experience after working at Banco Santander and Dunas Capital where they led the investment activity in transport assets;
  • This type of asset is characterised by being liquid and global in scope, as well as by maintaining its value over time and providing partial protection against inflation through its residual value;
  • Arcano Aviation Fund, FCR will have a global focus, and is targeted on private banking clients and institutional investors

Madrid, 30th October 2023.- Arcano Partners has launched a new investment vehicle specialising in transportation assets with a particular focus on the global aviation sector. Specifically, the firm has developed this new private equity investment vehicle, Arcano Aviation Fund, PEF whose strategic focus is to invest in long-term income assets with strong performance counterparties. These assets are characterised by their long lives, their de-correlation to other traditional financial assets, as well as the generation of stable and predictable cash flows.

The new fund has a fundraising target of approximately EUR 100 million and is aimed primarily at institutional investors and private banking clients. In addition, the possibility of incorporating other complementary vehicles is also envisaged, so that the total investment could reach up to €150 million. Andbank will participate in the distribution of the Fund among its private banking clients.

The Arcano Aviation Fund, FCR will be managed by a team specialised in transport asset finance. This group of experts has extensive experience in the full investment cycle managing and structuring the investment of over €1 billion of capital with an asset value of approximately €5 billion in the transport sector. Its most recent experience includes investing in a diversified portfolio of 12 commercial aircraft leased to leading international airlines such as Delta Airlines and Qatar Airways.

Positive growth prospects for a sector with a stable historical development

Despite being one of the sectors that suffered the most during the Covid-19 pandemic, it has also been one of those that has recovered the best, especially in these last months of 2023 where it has become clear that it is a resilient sector that already exceeds the levels of demand recorded in 2019.

The long useful life of these real assets (more than 25 years) and their ability to move to any part of the world to continue their operation make them a predictable asset with very stable cash flows over the long term. Likewise, they have historically shown a very uncorrelated behavior with respect to other more traditional assets.

The current context, marked by delays in the global supply chain, has led to a deferral of aircraft deliveries to airlines and lessors, which in turn has strongly supported asset valuations, thereby improving the collateral they provide for these investments. Despite the timely delay, the outlook for aircraft fleet growth is very positive and is expected to double over the next 20 years to more than 46,500 by 2042 according to figures provided by the two main manufacturers Airbus and Boeing.

Jon Garaiyurrebaso, Managing Partner of Arcano Asset & Capital Finance, has indicated that "investment in this type of assets is increasingly in demand among investors. Arcano Aviation Fund, FCR will follow a conservative investment strategy based on (i) geographic diversification, by asset type and counterparty, (ii) by the selection of liquid assets and (iii) the search for solid long-term counterparties.”

Miguel Cacho, as the new Managing Director of Arcano Capital SGIIC, S.A.U., said: "The aviation sector has shown a spectacular recovery in recent months, reaching levels of demand similar to 2019. We have strong relationships in the market that allow us to have differential access to a large number of investment opportunities in this segment.”