one to watch
The aircraft leasing sector continues to be one of Ireland’s quiet success stories. The achievements of GPA, despite its failure in the Nineties, paved the way for ambitious start-ups like Avolon. Ann O’Dea speaks to chief financial officer Andy Cronin
Dubliner Andy Cronin worked for several years with SR Technics after completing a master’s in industrial engineering at UCD and moving on to RBS Aviation Capital in 2004, where he worked on the investor mar- kets team. He was one of a group of seven that left in January of this year to join the latest venture from Ennis-born businessman Dómhnal Slattery – Avolon. Slattery started out in Tony Ryan’s former Shannon- based leasing firm, GPA (Guinness Peat Aviation), before going on to set up his own aircraft leasing com- pany, International Aviation Management Group (IAMG), which was later sold to Royal Bank of Scotland to become RBS Aviation Capital. Ireland is today a global centre for aviation finance,
with some 30 players present here, thanks largely to the GPA days, which spawned a network of expertise on this small island, both directly and indirectly involved in the industry.
Inflection points “There are two real inflection points in aircraft leasing,” says Andy Cronin, the youthful CFO of new player Avolon. “One was when GPA failed back in the early Nineties and that was bought by GE, which went on to become GECAS (GE Commercial Aviation Services), the largest aircraft leasing company in the world and the most profitable.” That transaction was led by Denis Nayden, who went
on to become chairman and CEO of finance giant GE Capital. Nayden is today one of three managing partners of Oak Hill Capital Partners, which provided Avolon’s set-up investment of US$250m. Today he is also chair- man of Avolon. “He very much sponsored this transac- tion from the start,” says Cronin. “The second inflection point was immediately post
9/11,” continues Cronin. “Our CEO Dómhnal Slattery was the owner and CEO of a business called IAMG, which he sold to RBS, and post 9/11 that business went
on to become the third largest leasing company in the world, led by Dómhnal.” Slattery left aviation behind in 2004, and went on to
different roles within RBS, ultimately leaving the bank in 2007 to pursue other interests. “Avolon is basically a teaming up of Denis and Dómhnal who had a relationship going back a number of years,” says Cronin. “Oak Hill is the cornerstone capital behind the business. It committed very early on to the business with US$250m of equity.” There followed the departure from RBS Aviation of
Cronin and six colleagues to join the new enterprise. This created a buzz in the market, according to Cronin, and Oak Hill was quickly joined in May by two new equity partners CVC Capital Partners and Cinven, each of which also stumped up US$250m of initial capital. “So we launched in May with the three equity spon-
sors on board, with Denis Nayden as our chairman and Dómhnal Slattery as our CEO,” says Cronin. “We’ve a very experienced team, with people who’d been dealing with airlines and banks for years, who know the space, who know the industry very well, so that was very suc- cessful. It was one of the largest equity raises within avi- ation for quite some time. “We also launched with US$615m of committed debt,
and we’ve since raised about another half billion of debt and we’d expect it to be broadly another half billion by the end of the year. So by the end of our first year, hav- ing started in May, we’d expect to have about US$2.5bn of capital raised, which is a pretty fast growth rate.” The new venture has offices in Shanghai, Hong Kong,
New York and Dublin, with 27 people, 24 of whom are employed in Ireland. Michael Lillis recently came on board as chairman in Latin America. “Michael’s obvi- ously very experienced,” says Cronin. “He headed up Latin America for GECAS for many years so he has been very successful in improving our footprint and enhancing our relationships in Latin America, which is a great asset to the business.”
30 Irish Director Winter 2010
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