Airline Economics Growth Frontiers - Dublin January 2017Source: Airbus Global Market Forecast...
Transcript of Airline Economics Growth Frontiers - Dublin January 2017Source: Airbus Global Market Forecast...
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Airline Economics Growth Frontiers - Dublin
January 2017
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“Provide Innovative Financing Solutions to our Customers and become the Largest and Most Profitable Aviation Fund in the World”
Stellwagen Capital – What’s the Mission?
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Pillars of Success
Experienced, Incentivised Management
Team
InnovativeInvestment
Products
Aviation Debt Market Opportunity
Globally Sourcing Investors & Capital
Exceptional Returns
Unique Capability
1 2 3 4
Highly Efficient Low Cost Structure
5
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Stellwagen Group Structure
StellwagenTechnology
(“StellTec”)
Guardian
Holdings
Stellwagen
Capital
(“StellCap”)
Stellwagen
Group
StellwagenFinance
(“StellFin”)
Seraph
Aviation Management
(“Seraph”)
Loan Origination
Portfolio Management
Asset Management
Technology
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It’s About People’s Attitude…………
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88 years
Management/Background Professional Experience
Howard Millar: CEO - Ryanair, Almarai 28 years
Edward Hansom: CRO - AerFi/GPA Group, SMBC 28 years
Pradeep Hathiramani: CIO - Fifth Street, KKR, GATX 23 years
Michelle O’Toole: Inv. Rel. - Blackstone, Lehman Brothers 9 years
Highly Experienced & Incentivised Management Team
Average of 20 years experience
All invested & incentivised via bonus & shares
Total:
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Traffic Growth Drives Opportunity
Source: Airbus Global Market Forecast 2015-2034 (presentation), p.10.
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Aircraft are a Low Risk Investment Asset
Loss and Recovery Rates for All EETCs (1994-2014)(2)
Over 20 years of EETC loss history demonstrates very stable collateral price performance despite high levels of airline corporate defaults
TrancheApproximateCumulative
Loss Rate
Cumulative Recovery Rate
A 0.1% 99.9%
B 1.4% 98.6%
C 3.0% 97.0%
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Aircraft Returns Compare Favourably to Other Asset Classes
(1) Sources: Seraph, Ascend, Guardian, NCREIF Real Estate Index, Bloomberg.(2) This analysis includes 38 passenger aircraft types, including both single- and twin-aisle models. Aircraft performance figures would be better on both
measures (annual return and volatility) with simple asset selection. (3) US real estate is more volatile by region than the national figures reflected in the NCREIF index used here.
During periods of higher airline stress and defaults, aircraft values weakened, but for shorter periods and to a lesser extent than most other asset classes
Asset Class Analysis (1986-2016)(1)
Asset ClassAverage Total Return
(CAGR)Volatility of Returns
Correlation with Aircraft
Aircraft(2) 6.8% 9.3% 1.00
S&P 500 7.4% 14.9% 0.52
US Real Estate(3) 7.9% 7.9% 0.48
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Aviation Debt Market Opportunity
Aviation Banks retreat due to Basel III & IV and capital requirements
US and EU export credit banks closed
$127 billion of new aircraft deliveries in 2016, rising to $172 billion by 2020
$70 billion worth of aircraft to be re-financed annually
Senior loan economics attractive for both airlines and lessors – Operating Lease Killer
Very restricted competitive offerings from just a few banks
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Senior Loan Investment Opportunity
Provides secured financing to both airlines and lessors
Very attractive balloon structure – cash flow light
10 year closed end investment grade fund
Target return with leverage of 7%
Innovative loan trading drives returns to over 10%
A dynamic investment with significantly higher returns than competitors
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Highly Efficient – Low Cost Structuring
Highly efficient tax structure
No withholding tax on
distributions
Low fees negotiated with
all service providers
Use technology and outsourcing to keep costs low
Ensure maximum
returns generated for investors and
Group
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It’s Never Plain Sailing
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Stellwagen Capital Summary
World leader in aviation investment funds
Create and deliver innovative investment products
Source capital & investors globally
Unique opportunity in aviation financing
Generate exceptional returns for investors
Create and deliver innovative investment products
Source capital & investors globally - $120m equity hard circled
Unique opportunity in aviation financing
Generate exceptional returns for investors
Deliver highly profitable business