Airbus will invest US$100 million in a Sharia-compliant plane-leasing fund amid burgeoning demand from carriers in the Middle East.
Airbus and Jeddah-based Islamic Development Bank will each provide 10 per cent of an initial $1 billion in equity, according to Dubai-based Quantum Investment Bank, which is helping to establish the fund with Palma Capital.
The Airbus Leasing Islamic Fund, which aims to raise $5bn in equity and debt over two years, will be managed by International Airfinance and focus on the most popular single-aisle A320s and A330 and A350 wide-bodies, Quantum chief executive Idriss Ghodbane said in a phone interview.
“We wanted something more liquid than real estate and felt that transportation would be an ideal asset,” Mr Ghodbane said. “The trend for airlines is to lease aircraft rather than own for balance sheet reasons.”
The fund will target carriers from Islamic states, led by those in the Gulf and Southeast Asia, offering new and used planes. It has approached sovereign wealth funds about investment, Ghodbane said, adding some deals with airlines have been signed and the first tranche of the fund is due to close in the third quarter.
“There’s a lot of Islamic liquidity sitting in the market and looking for better options,” he said. The fund will have a debt to equity ratio of about 25 per cent, Mr Ghodbane said.
Habib Fekih, Airbus’s president for the Middle East and North Africa, will chair the fund’s board. “This innovative financing initiative will enable us to satisfy our customers’ business needs even more effectively,” Mr Fekih said in a statement from Quantum.
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