Dubai Aerospace gets $1.4 billion investment mandate

DAE to acquire and manage aircraft on behalf of the unidentified investor

Moody's changed its outlook of plane lessor Dubai Aerospace Enterprise to stable from 'rating under review'. Courtesy of DAE

Dubai Aerospace Enterprise (DAE), the Middle East’s biggest plane lessor, received a mandate to acquire and manage aircraft worth about $1.4 billion (Dh5.14bn).

The multi-year mandate by the investor, one of the world’s largest fund managers, will target narrowbody and widebody jets that DAE will source through its secondary market trading and sale-leaseback channels, DAE said in a statement on Monday, without identifying the investor. The plane lessor has already acquired a quarter of the portfolio.

"DAE is thrilled to have the opportunity to grow its managed aircraft business by sourcing and managing aircraft for a world-class financial institution," Firoz Tarapore, DAE's chief executive, said.

DAE's Aircraft Investor Services (“AIS”) unit will manage the assets on behalf of the investor. The mandate will also involve assisting the investor with the capital structure for the acquired aircraft.

The mandate will bring DAE’s managed portfolio to more than $2.7bn in assets under management, it said. Along with other ongoing projects, DAE expects its managed portfolio to grow to its target of $5bn.

The plane lessor owns more than 300 aircraft and will manage more than 100, as it continues talks with 250 client airlines, Mr Tarapore said.

"This scale and relevance combined with our 150-person full-service platform and our industry leading AIS offering is a very compelling value proposition for investors in the managed aircraft space” Mr Tarapore said.

State-controlled DAE recorded a 1.2 per cent dip in second-quarter profits. Net income attributable to shareholders for the three months ending June 30 fell to $98.2 million (Dh360m), from he prior-year period.

DAE has a long-term Issuer default rating of "BBB-" with a stable outlook from Fitch Ratings.

After the company repurchased shares held by Emaar Properties, it is now fully owned by the Investment Corporation of Dubai (ICD).

Last month DAE said it raised $490m from three loan agreements, with maturities ranging from three to seven years, to finance its growth plans.