Real World Read – Avolon [M&A +Financing]
Although not technically a read, I was kindly sent a link to an interesting video of a short interview with Domhnal Slattery – CEO of the aircraft leasing company Avolon. (Thanks to Shane Gorman for the link)
The aircraft leasing industry is a huge industry globally and a large part of it takes place out of Ireland (a lot of this is down GPA, a firm set up by Tony Ryan). From a finance perspective, the area of aircraft leasing is very specialist (there are now specialist qualifications in aircraft leasing finance) but the general principles of corporate finance in terms of financing decisions, valuation issues, and risk management are still applicable.
The video provides a short insight focused on the integration of a new recent acquisition by Avolon and also touches on a number of corporate finance related topics in the conversation such as;
- M&A integration – after the transaction – culture, management, etc;
- Importance of capital markets for the company and reaching investment grade status with the ratings agencies – to purchase aircraft;
- How the company funds itself – via term loans from banks and bonds in capital markets – reaching investment grade;
- The reliance of the aircraft leasing industry on the capital markets and the risk of capital market liquidity for the industry in the future;and
- IPO possibilities and valuation considerations.
See here for more links about the CIT acquisition (take note of how the deal was funded with a mix of cashflow, equity contribution + debt raise);
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