Dubai Aerospace Enterprise (DAE) Ltd. said it agreed to acquire Dublin, Ireland-based aircraft leasing group AWAS from London-based private equity firm Terra Firma Capital Partners and the Canadian Pension Plan Investment Board (CPPIB). Terms of the deal were not disclosed.

Operating for more than 30 years, AWAS is one of the world’s leading aircraft leasing companies, with a fleet of 263 owned, managed and committed narrow and wide-body aircraft, including a pipeline of 23 new aircraft on order to be delivered before the end of 2018. AWAS currently provides customized aviation solutions to over 85 airline customers in over 45 countries, with owned aircraft assets of roughly US$7.5 billion as of November 2016.

AWAS was formed through a combination of the original AWAS acquisition in 2006 and the follow-on acquisition of Pegasus in 2007. At acquisition in 2006, AWAS owned 154 Airbus and Boeing aircraft, with attractive long-term leases and many providing strong rental yields. Terra Firma identified the aviation transportation sector as an essential part of economic development, with the world fleet expected to double by 2034 and demand for leased assets anticipated to increase as airlines shift from owning to leasing.

Terra Firma and CPPIB have been long-term investors in AWAS, since 2006. In March 2015 the company sold a portfolio of 84 aircraft to Macquarie Group.

Dubai Aerospace is a globally recognized and award winning aerospace company headquartered in Dubai.

The combined company will have an owned, managed and committed aircraft fleet of 394 aircraft with a total value of over $14 billion. It will serve over 110 airline customers in over 55 countries from offices in Dubai, Ireland, Singapore and the United States.

“This acquisition of AWAS is strategically compelling and propels DAE into a top 10 aircraft leasing platform,” said DAE Managing Director Khalifa H. AlDaboos. “Our leasing business has been growing at a rapid clip and this acquisition will more than double the current size of our business, providing the necessary scale for DAE to best serve its customers.”

“Over three decades AWAS has built a respected brand, a highly experienced workforce, and a world-class platform with all key capabilities in-house. We are delighted to be able to acquire this platform, and to combine it with our capabilities to offer our global customers an even wider range of aviation solutions,” said DAE Chief Executive Officer Firoz Tarapore. “In addition, this combination results in a well-diversified portfolio with the ability to generate strong risk-adjusted returns.”

“I’m delighted with today’s announcement and believe this is the right time for Terra Firma to realize maximum value for our investors,” said Guy Hands, Chairman and Chief Investment Officer of Terra Firma. “Under our ownership, we have transformed the company to better reflect the fast-changing market that it serves. This has been achieved through an active aircraft acquisition and disposal strategy to optimize the business’s portfolio and align with its diverse customer base.”

“We are pleased with the outcome of this transaction,’ said Ryan Selwood, Managing Director, Head of Direct Private Equity, CPPIB. “We continue to believe that the aircraft leasing industry is a highly attractive market for CPPIB over the long term and look forward to exploring future opportunities to invest in the sector at scale, subject to market conditions.”

Founded by Guy Hands in 1994, Terra Firma is one of Europe’s leading private equity firms. Terra Firma specializes in the acquisition and fundamental transformation of asset-backed businesses, focusing on investments in transformational private equity, operational real estate and infrastructure. Since 1994, the firm has invested over EUR16 billion of equity and completed transactions with an aggregate enterprise value of EUR48 billion.

Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 20 million contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2016, the CPP Fund totalled C$298.1 billion.

The deal will be financed by DAE’s internal resources and committed debt financing. The deal is subject to regulatory approvals and is expected to be completed in the third quarter of 2017.

DAE was advised by Freshfields Bruckhaus Deringer LLP and Morgan Stanley & Co. LLC. DAE was also advised by KPMG and Latham and Watkins LLP.

Goldman Sachs is acting as financial advisor and Milbank as legal advisor to the seller.

Photo: Guy Hands, Chairman and Chief Investment Officer, Terra Firma Capital. (Evening Standard)

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