Guggenheim Aviation Partners has more than doubled its debut fund with the close of its second, aircraft-focussed fund on $737 million (€524 million).
All of the “major investors” from Fund I, which closed on $278 million in 2005, returned for the second vehicle, while new investors accounted for between 40 and 50 percent of the fund’s committed capital, said president and chief executive Stephen Rimmer. The firm’s second fund attracted more attention from the endowment community than did its first, he added.
Roughly $400 million of the fund’s capital has already been deployed. Rimmer said he anticipates the fund will ultimately invest between $3 billion and $3.5 billion, including leverage, in 100 to 125 airplanes.
Guggenheim Aviation Partners is a partnership between Guggenheim Capital and a group of aviation advisors, a number of whom previously worked at aircraft leasing firm Curtis & Company. The firm’s funds acquire and lease aircraft, seeking out assets that are undervalued by rating agencies and other industry players. A large part of the firm’s strategy involves converting passenger carriers into aircraft cargo, a market that the firm believes is currently underserved, though is gaining popularity with other investors including Oak Hill Capital Partners and Fortress Investment Group.
Guggenheim Aviation Partners is close to fully exiting its first fund, the returns of which are expected to “significantly exceed” an original goal of 20 to 25 percent per annum, Rimmer said.