Howard Millar, former deputy to Micheal O'Leary at budget airline Ryanair, looks to raise $250 million (£190 million) for aircraft leasing fund with 8% dividend yield.
Howard Millar, the former number two at budget airline Ryanair (RYA) is seeking to raise $250 million (£190 million) for an aircraft leasing fund offering an 8% dividend yield.
Sirius Aircraft Leasing Fund will invest in a portfolio of second-hand, single-aisle aircraft, such as the Boeing 737 and Airbus A320, which it will lease to airlines around the world.
It says the secondary market is strong with big airlines last year selling over 300 planes worth around $8 billion as they strive to reduce the average age of their fleets.
Meanwhile it believes demand for renting second-hand planes is robust as operators such as BA-owner International Airlines Group (ICAG) and Deutsche Lufthansa seek to defray their acquisition costs and expand short-haul routes.
Sirius Aviation Capital Holdings (SACH) Limited, the fund’s investment adviser led by Millar, reckons it can generate an annual total return of 10% using gearing – or borrowing – of up to 50% to leverage its assets.
Millar, who in a 23-year career at Ryanair rose to become deputy chief financial officer and deputy to the carrier’s founder Michael O’Leary, said: ‘We are currently assessing a number of attractive portfolios and anticipate that the funds raised will be deployed within six months of admission.’
Millar left Ryanair in 2014 but remains on its board as a non-executive director.
At the time of his departure Millar told Reuters: ‘I’m in a situation where the chief executive is the same age as me, and I don’t think he’s going anywhere soon.
‘I don’t want to look back in five or six years’ time and say, “Maybe I should have looked to do something else.”’
He joined Stellwagen Group, a global aviation management and finance firm, as chief operating officer but unexpectedly quit last year, taking two colleagues, Edward Coughlan and Ed Hansom, to Sirius as chief commercial officer and chief investment officer respectively.
Sirius is not the first company to exploit plane leasing. There are currently five such specialist investment companies worth around £1.5 billion listed on the London Stock Exchange. These yield around 8% and their shares trade at premiums above net asset value (NAV), indicating the investor demand that Sirius hopes to tap into.
Four are managed by Nimrod Capital in London under the Amedeo and Doric brands with DP Aircraft (DPA ) run by DS Aviation in Germany.
SACH will charge 1% of the fund’s NAV and gain a performance fee of 15% of annual returns over a 10% hurdle rate. Sirius plans to publish a prospects later this month and hopes to float in early November.