· Within two years of the initial investment, Dunas Aviation I FCR and Dunas Capital Aviation SCR have already distributed approximately 37% of their initial contributions to their participants.
· After reaching a combined close of €104 million in January 2020, the management team built a diversified portfolio of 12 long-term leased commercial aircraft with top-tier airlines, valued at €385 million.
· Dunas Capital has begun to explore the potential launch of a second commercial aircraft fund that would follow a similar strategy to the first.
Madrid, 9 of October, 2023. Dunas Capital, a Spanish independent asset management firm, has initiated the disinvestment period of its Dunas Aviation I FCR and Dunas Capital Aviation SCR vehicles with the sale of two Airbus A220-100 aircraft for more than €75 million.
With the sale of these two short to medium-range aircrafts to two Asian groups specializing in air and naval transport leasing, the Dunas Aviation I FCR and Dunas Capital Aviation SCR vehicles have generated an Internal Rate of Return (IRR) of around 20% on these disinvestments.
Additionally, these innovative private capital vehicles, the first of their kind in Spain, have already distributed approximately 37% of their initial contributions to their participants.
These disinvestments occur at a time when aircraft manufacturers are facing challenges in meeting agreed-upon delivery timelines with airlines due to a significant increase in demand and supply chain disruptions on a global scale.
Both commercial passenger traffic and cargo transport have reached or even exceeded pre-pandemic levels. In this context, an annual increase of 3.6% in passenger traffic and an estimated demand for 41,000 new aircraft by 2042 are projected. Simultaneously, the aviation industry has set a target to achieve net-zero CO2 emissions by 2050.
A Global and Diversified Portfolio
Dunas Capital reached a final close of €104 million for the Dunas Aviation I FCR and Dunas Capital Aviation SCR vehicles in January 2020. Their LPs include institutional investors (insurance companies, pension funds, mutual societies, social security entities, etc.) as well as private investors, after Dunas Capital Group reached an exclusive distribution agreement with a top-tier private banking network.
After analysing more than 100 potential transactions, the fund managers built a globally diversified portfolio of 12 commercial aircraft valued at €385 million. The strategy focused on investing in long-term leased commercial aircraft with airlines that have clear State support and those with higher exposure to domestic traffic.
Within the described strategy, two deals were closed with Portuguese airline TAP for two Airbus A321 LR Neo aircraft and one with Qatar Airways for a Boeing 787 Dreamliner, two Airbus A220-100 aircraft leased to American airline Delta Airlines, and seven A321s to Cebu Pacific, the leading Philippine airline for domestic island-to-island traffic. This way, the management team successfully built a globally diversified portfolio with exposure to four aircraft models, four distinct geographic regions, and four top-tier airlines.
Dunas Capital Real Assets, comprised of a team with over 20 years of experience and led by Gregorio Herrera, acted as an advisor for the investments. Legal and tax advice was provided by KPMG, Watson Farley & Williams, DWF RCD, and Walkers Global. Arena Aviation Capital served as the technical manager and advisor for the operations. The International Bureau of Aviation acted as a specialised consultant for the fund.
Following the successful results of its first commercial aircraft fund, Dunas Capital has begun to explore the possibility of launching a second fund that would follow a similar strategy to its predecessor, with a particular focus on ESG aspects during the investment process, assessing the sustainability goals of the airlines it collaborates with. The project to launch a new vehicle is still in the study phase, and the presentation and marketing stage will not begin until it has been registered and approved by the Spanish Securities Market Commission (CNMV).
"At Dunas Capital AM, we see investment in the aviation sector as an exciting, promising, and future-oriented opportunity. Our experienced management team's ability to identify strong assets and execute quality investments has been crucial in building a portfolio that offers stable long-term returns with a low-volatility and underlying assets that are uncorrelated to more traditional investments," stated David Angulo, Chairman of Dunas Capital.
"Dunas Aviation addresses a strategic market need and adds value to both the aviation industry and investors," explained Gregorio Herrera, Partner at Dunas Real Assets. "These initial disinvestments are proof that this is the right path and that there is demand for these types of products, offering excellent investment opportunities and profitability."