PGGM flies into aircraft leasing with 25% Macquarie AirFinance deal

Dutch pension fund manager aims to address 'complex sustainability issues' the sector faces.

PGGM has taken its first steps into the aircraft leasing sector by securing a 25 percent stake in Macquarie AirFinance.

The Dutch pension fund manager invested in Macquarie’s aircraft leasing arm, part of the Macquarie Corporate Asset Finance division, through the PGGM Infrastructure Fund.

PGGM launched the open-ended vehicle in 2010. According to Infrastructure Investor data, it currently has €7.10 billion in capital and a target size of €12 billion.

Macquarie AirFinance, which was established in 2006, invests on balance sheet and sits entirely separately from Macquarie’s infrastructure funds business. It owns close to 200 aircraft and has customers in around 50 countries. It also offers advisory services to aircraft owners.

According to Macquarie’s latest financial results, published last week, the aircraft leasing business comprises 54 percent of the group’s corporate and asset finance division.

Macquarie also stated in its results that the aircraft leasing business would be deconsolidated from the division as part of PGGM’s investment. It will henceforth sit as a Macquarie-operated entity for which the group will earn fees for management support and origination services.

Macquarie AirFinance made $1.8 billion in new financing commitments in the two years to the end of December 2018. Its portfolio is worth around $5.7 billion. .

Macquarie’s head of transportation finance, Stephen Cook, said in a statement that PGGM was the “ideal partner” for Macquarie AirFinance.

PGGM’s head of infrastructure, Erik van de Brake, said it was looking at ways to help make the aviation sector – which he described as facing “complex sustainability issues” – more efficient and economical. PGGM declined to comment further on the deal.

The move is the second play by an infrastructure group in the aircraft leasing sector in recent months. It follows KKR’s decision in January to invest in lessor Altavair in a deal worth around $1 billion.