OMR80 million aviation leasing fund launched in Oman

Muscat: A OMR80 million ($208 million) aviation leasing fund has been launched by Oman Brunei Asset Management (OBAM), previously known as Oman Brunei Aviation Leasing. Oman Aircraft Leasing Fund 1 will be listed on the Muscat Securities Market (MSM) with 8,000 units of OMR10,000 each.
The fund, being offered via a private placement, is a 12-year closed-end mutual fund designed for local and regional financial institutions and ultra high net worth individuals (UHNWIs) with OMR1million ($2.6 million) or more to invest.
The fund is sponsored by Oman Brunei Investment Company (OBIC), who is a cornerstone investor with a subscription of OMR7.7 million, and will be managed by OBAM who will provide fund management and lease management services.
OBIC, along with other initial investors, are subscribing for 1,540 units for OMR15.4 million, so the private placement is for 6,460 units at a price of OMR10,150 per unit.
Majid Al Toky, Oman Brunei Asset Management chairman, said, “We are delighted to offer an attractive opportunity for investors to invest in the aircraft leasing sector. The launch is a culmination of over 12 months of diligent work with our stakeholders and partners, during which time we have purchased five new Boeing B737 aircraft with long-term leases to Oman Air, the national airline of the Sultanate of Oman, which will be the first assets into the fund.”
“This is a great start as it means that the fund, which will have an aggregate buying power of up to $500 million through the combination of the fund capital and the use of limited recourse financing, will be effectively fifty percent invested soon after closing, giving investors a lot of visibility of and confidence in where the fund’s investments are being made.”
Simon McLean, OBAM’s chief executive officer, said, “We have carefully structured the fund to provide the investors with an attractive stable running dividend yield of 7.5 per cent or more secured on young and fuel efficient in-production commercial aircraft on lease to ‘top-tier’ airlines globally.”
According to him, going forward, the fund will seek to diversify its asset and/or airline risk with investments in the Gulf Cooperation Region and further afield.
Oman Arab Bank-Investment Management Group is the fund’s Issue manager and sole collecting bank and OBAM and OBIC have been advised on the fund by law firm, Curtis, Mallet-Prevost, Colt &Mosle.
OBAM is Oman’s very first aircraft leasing and asset management company, specialising in the provision of tailored leasing, aviation finance, investment, asset management and remarketing solutions to leading airlines globally and investors.
OBAM is owned by Oman Brunei Investment Company and the State General Reserve Fund of the Sultanate of Oman. OBAM is licensed as a fund investment manager by the Oman Capital Markets Authority (CMA).
OBIC is a closed Omani joint stock company owned by the governments of the Sultanate of Brunei (Brunei Investment Agency 50 per cent) and the Sultanate of Oman (State General Reserve Fund 50 per cent). Formed in 2009, OBIC is a private equity firm based in Oman investing in attractive medium sized companies and works along with the management to create value.