south africa market guide 2011 - corporate jet investor · 2018-07-05 · this report is based on...
TRANSCRIPT
South Africa market guide 2011
© Corporate Jet Investor 2011
South Africa market guide 2011
South Africa market guide 2011
© Corporate Jet Investor 2011
Executive summary
It is relatively simple to find business jet or helicopter finance in South Africa. There is healthy competition amongst local banks to finance both smaller jets and helicopters. Whilst some smaller clients have struggled in the last two years financiers are keen to lend. In the larger cabin markets South African banks are active on both domestic and cross-border deals across Africa and comfortable with structured deals.
About this report
Corporate Jet Investor is a website and event organiser focusing on helicopter and business jet
finance.
This report is based on face-to-face meetings, telephone interviews, third-party publications and
websites and the from a roundtable meeting of banks, traders, lawyers and brokers in Johannesburg
in April 2011.
The report was published in June 2011.
Over 5000 people use www.corporatejetinvestor.com every month and our paying subscribers
include banks, leasing companies, manufacturers, lawyers, consultants and
South Africa market guide 2011
© Corporate Jet Investor 2011
Contents Executive summary ......................................................................................................................... 2
Introduction ........................................................................................................................................ 4
Aircraft Finance ................................................................................................................................... 5
Smaller aircraft and helicopters ...................................................................................................... 5
Brokers ............................................................................................................................................ 6
Mid-cabin and large aircraft finance ................................................................................................... 7
International lenders ...................................................................................................................... 9
Lawyers ......................................................................................................................................... 10
Aircraft and helicopter sales ......................................................................................................... 11
Technical advisers ......................................................................................................................... 13
Aircraft managers and operators .................................................................................................. 14
South Africa market guide 2011
© Corporate Jet Investor 2011
Introduction
South Africa dominates the sub-Saharan business jet and helicopter market. Most African business
jets are maintained in world-class facilities in Johannesburg and Cape Town and a number of aircraft
based in foreign jurisdictions are listed on the South African register.
Some private jets are owned by high net worth individuals but the size of South Africa means that
business jet and helicopters are largely used as a business tool rather than as a luxury product and
the market tracks key industries like mining, natural resources and tourism. Although several
operators – such as King Air Services and National Airways Corporation - are also active supporting
aid organisations – including the United Nations – in other African countries this is a smaller part of
the market.
Although there is a perception that Africa is a convenient dumping ground for older jets this is
becoming less true. There are opportunities for older pre-owned jets but traders say that they
buyers are increasingly focusing on aircraft that are less than eight years old.
The main airports are Lanseria, about an hour away from central Johannesburg, and Cape Town
International Airport. However business jets are seen at all major airports. Although Lanseria can be
a hot and high take-off (limiting some older jets) and foreign object damage can be an issue at some
airfields, maintenance specialists say it is an easy country in which to operate an aircraft – not least
because of the number of high quality maintenance organisations. Maintenance companies are also
experienced in dealing with import restrictions on spares and replacement engine.
The country has a sophisticated and competitive finance market. Investec and Rand Merchant Bank
are committed to larger aircraft finance across the continent with Nedbank more reluctant lender to
borrowers that are not existing customers. Wesbank, a division of FirstRand Rand, is the leading
financier of small aircraft and helicopters. The finance and legal community is concentrated in
Sandton, which is between Lanseria and central Johannesburg.
South Africa market guide 2011
© Corporate Jet Investor 2011
Aircraft Finance
The aircraft finance market is split into two groups determined by transaction size.
Banks in the smaller aircraft market typically offer aircraft finance alongside vehicle and general
asset finance, and focus on domestic deals worth up to $5 million.
The South African institutions that provide finance for larger jets typically do so alongside
commercial aircraft finance and are comfortable with international transactions.
First Rand demonstrates this split well with Rand Merchant Bank financing larger jets and its sister
company Wesbank focusing on smaller deals.
Lenders estimate that between 60% and 70% of all corporate aircraft and helicopters are financed in
both markets.
South African banks fared better than most during the credit crunch but did tighten up aircraft and
helicopter lending. Aircraft loan-to-values have tightened considerably in the last two years and
lenders requiring more information for deals and take monitoring seriously.
Although the market is competitive, a number of banks have exited from business jet and helicopter
finance in the last few years. This is both because of problems with portfolios and due to bank
mergers – First Rand also owns First National Bank, which was a small aircraft lender, and Nedbank
acquired Imperial Bank.
Smaller aircraft and helicopters
As with international markets, the smaller aircraft finance has been hit particularly hard. The
commoditised nature of the market meant that many banks did not spend much time monitoring
assets or hold maintenance reserves. This has changed. Wesbank, for example, now insists on
aircraft having satellite tracking so they can monitor location and usage.
Charter operators fared the worst in the last three years and banks which traditionally took an asset
finance view are now also looking at credit or repayment risk more thoroughly.
One major issue during the last five years has been the willingness of some South African buyers to
effectively bet on foreign exchange by using South African rand funding for US dollar assets and cash
flows. Some of these borrowers were unable to pay when the rand strengthened. It also lowered the
value of aircraft on bank’s book.
South Africa market guide 2011
© Corporate Jet Investor 2011
Wesbank
Wesbank (the division of FirstRand Bank specialising in asset finance) is the largest asset finance
company in South Africa. The aviation teams focuses on general aviation and smaller business jets
and is the most active bank in this market.
Colin Squair
Head: Aviation and Yellow Metal
+27 11 632 5582
Ryan Harrison
Sales Manager - Aviation Finance
+27 834607026
Standard Bank
Nicolette Farquhar
+27 11 631-6583
Brokers
Aircraft Finance Corporation
Launched by Ryan Forrester, the son of one of the founders of National Airways Corporation, Aircraft
Finance Corporation is the leading aircraft finance broker in South Africa.
Jaco Pietersen
+27 11 467 8577
Ryan Forrester
Airbourne Insurance
Aircraft Finance Corp’s sister company is one of the largest business jet insurance brokers.
Scott Smith
Managing director
[email protected] + 27 11 467 8577
South Africa market guide 2011
© Corporate Jet Investor 2011
Mid-cabin and large aircraft finance
Investec, Rand and Nedbank all have specialist aircraft finance teams that work in both the
commercial and business aircraft markets. Many of these have a background in tax leasing so are
comfortable with complex international deals and can also lend from banks or branches outside
South Africa including the UK, Mauritius and the Isle of Man. These branches help avoid issues with
South Africa’s Exchange Control regulations which makes international deals complicated for
domestic banks.
Unlike European banks that specialise in different markets, South African banks aretypically willing
to finance individuals, corporates, governments and operators. The major banks also offer aircraft
finance through their private banking groups.
The larger banks tend to have close relationships with distributors like NAC (which represented
Hawker Beechcraft in 2010), ExecuJet (which was distributor for Bombardier until 2009) and Comair
(Cessna) which makes it hard for international lenders and smaller banks to compete.
Investec and Rand Merchant Bank are the most active business jet lenders in sub-Saharan Africa.
However, a number of international financiers are keen to grow their portfolios in the region.
Investec
Melanie Humphries
Head of Aviation Africa and Middle East
+27 11 286 7539
Now a major international bank and asset manager, Investec was originally a South African leasing
company and it continues to be a specialist asset financier with aviation teams in Johannesburg,
Sydney and London. Investec Private Bank also provides finance to high net worth individuals.
Investec’s Johannesburg aviation team consists of four full time specialists covering commercial and
corporate aircraft finance. It prefers deals worth over $10 million and is keen to increase its business
jet lending. It has close relationships with manufacturers and operators and has done deals across
Africa.
Rand Merchant Bank
Wouter Du Preez
+27 11 2821310
Rand Merchant Bank is the investment arm of First Rand Group (which also owns Wesbank and
others). The aviation team focuses on commercial aviation and larger, mainly cross-border,
transactions and whilst most of its experience is in commercial deals it is keen to grow its business
jet portfolio.
South Africa market guide 2011
© Corporate Jet Investor 2011
Nedbank Capital
James Geldenhuys
Head: Aircraft Finance, Investment Banking
+27 (0)11 295 8313
The focus of Nedbank’s aircraft finance team is firmly on commercial aircraft financing for airlines. It
will consider very selective deals for corporates and individuals that are existing clients – and may
finance two or three in 2011 – but the bank does not want to actively market itself in this area.
Nedbank is only interested in larger value transactions.
It does have a legacy portfolio of smaller aircraft after acquiring the remaining shares in Imperial
Bank in 2009.
Nedbank’s aircraft finance team has been active across Africa and in the Middle East. It is also
evaluating opportunities in India.
Via Capital
Andrew Millard
CEO
+27 11 275 2800
When Nedbank acquired the remaining 49% of Imperial Bank it did not own, the specialist finance
team and its empowerment partners had the opportunity to buy out part of the business to form Via
Capital. Until 2005 Imperial was active in business jet and commercial aircraft finance.
One of the most exciting assets was Imperial Bank’s Eagle Bonds Programme an innovative Ex-Im
finance platform. The first Eagle Bond issuance in 2003 was used to finance three 737-800s owned
by local lessor Safair which then leased them to South African Airways. It was a breakthrough deal in
many ways – it took seven years before anyone else in the world issued ExIm bonds – and the deal
was unique in South Africa as the country’s only triple-A rated bond (it was also the first time that
Moody’s had ever rated a Rand bond.
Via Capital focuses on structured transportation and trade deals and most of aviation efforts are
centred on commercial aircraft. However, it is re-evaluating business jets and Eagle Bonds could
easily be adapted to finance business jets or helicopters both in South Africa and other countries.
South Africa market guide 2011
© Corporate Jet Investor 2011
International lenders
South Africa’s domestic finance market is competitive and sophisticated making it hard for
international banks and lenders to compete – particularly for Rand based financing. However, its
strong legal system makes it an attractive market for foreign institutions.
Bank of America Merrill Lynch
Rod Derbyshire
[email protected] +44 20 7174 5326
Bank of America has been a very active international business jet lender for over 20 years but has
increased its international exposure significantly since merging with Merrill Lynch.
CIT Robert Schaeberle
+1 407 833 9777
Problems with the parent company means the last three years has been quiet for CIT’s business jet
finance team. Now a bank rather than a finance company, CIT is keen to grow its portfolio quickly.
Cessna Finance Corporation
Andrew Woolfson
+44 207 682 2938
Cessna Finance Corporation is active in Southern Africa providing finance for Bell Helicopters and
Cessna Aircraft through its EXIM and EDC programs as well as other funding sources. It will no
longer finance other manufacturer’s aircraft.
Guggenheim Aero Capital
James Crowley
+1 203 393 7247
Guggenheim takes an asset finance view first and is growing fast. It has closed several deals in the
Middle East and Africa and is keen to work with African borrowers.
South Africa market guide 2011
© Corporate Jet Investor 2011
Lawyers
South Africa has a strong legal market with highly regarded firms including Webber Wentzel,
Bowman Gillfillan, Deneys Ritz (which become part of Norton Rose in June 2011) and others.
ENS
Sean Lederman
Director
+2711 269 7600
Sean Lederman at Edward Nathan Sonnenbergs (ENS) in Johannesburg, is highly recommended by
local lenders. “There are lots of good lawyers but he is the one we regard as the best for aircraft
finance,” says one Johannesburg aircraft finance head.
Clyde & Co
Paul Jebely
Head of Aviation – Africa and Asia
+852 2287 2883
Based in Hong Kong and a regular visitor to Johannesburg, Paul Jebely at Clyde & Co is recognised as
a specialist in African aircraft finance and represents a number of the major South African lenders on
English and US law transactions.
Gates and Partners
Aoife O’Sullivan
Partner
+44 844 692 4966
The specialist aviation law firm has a growing business jet practice and regularly advises ExecuJet on
sales and international lenders.
South Africa market guide 2011
© Corporate Jet Investor 2011
Aircraft and helicopter sales
Absolute Aviation
Neil Howard,
+27 82 337 5503
Launched by Neil Howard, former maintenance and executive director at ExecuJet, Absolute Aviation
gained prominence in early 2011 when it was named as distributor for Beechcraft.
Comair
+27 11 548 3000
Founded in 1946 Comair has been a representative for Cessna for over 40 years – the
manufacturer’s longest relationship with any representative. It also provides maintenance and
spares support.
ExecuJet
Robbie Irons
Regional sales manager, Africa & Indian Ocean Islands
+2711 516 2300
ExecuJet dominates much of South Africa’s business jet market running maintenance and facilities.
Its aircraft sales business is focused on larger aircraft – particularly Bombardier but it also sells
corporate airliners – and it is active across Africa.
Hawker Beechcraft
Christopher Hancock
Regional sales director
+27 11 267 5541
Hawker is the only manufacturer with a full time salesperson in South Africa.
South Africa market guide 2011
© Corporate Jet Investor 2011
National Airways Corporation
JP Fourie
Executive director – aircraft sales
+27 11 267 5555
Gary Phillips
Executive director – Helicopter sales
+27 11 267 5555
As well as running the largest pilot training school and maintenance facilities, NAC is one of the
leading sales companies. It is representative for Pilatus aircraft and Robinson Helicopters. Until 2011
NAC was also Hawker Beechcraft’s representative for Africa for 40 years until December 2010. NAC
is also active across aircraft and has sold a number of aircraft to Nigerian customers.
South Africa market guide 2011
© Corporate Jet Investor 2011
Technical advisers
IBA Group
Owen Geach
Commercial director
+44 1372 224488
IBA advises most of the country’s larger banks on technical matters and appraisals for business jets
and commercial aircraft.
Jet Support Services
Haydee Ramirez Garcia
Business development director – Africa
+1 312 494 8622
Jonathan Sawyer
Technical representative
+ 27 83 651 4869
The largest independent provider of engine and aircraft maintenance plans, JSSI has a full time
technical representative in Johannesburg with new sales handled from the Chicago head office.
South Africa market guide 2011
© Corporate Jet Investor 2011
Aircraft managers and operators
Many owners chose to operate and manage aircraft on their own although the number of aircraft
under management is also rising. Execujet and NAC are the largest and best known managers. The
following list is not exhaustive but covers some of the largest companies.
Absolute Aviation
Neil Howard
+27 82 337 5503
Launched by Neil Howard, former maintenance and executive director at ExecuJet, Absolute Aviation
gained prominence in early 2011 when it was named as distributor for Beechcraft.
AdoAir
A relatively new entrant created by DanieJoubert, the former managing director of ExecuJet Africa,
with Nigerian businessmen Adegboyega A Olulade chairman and GT Alli-Balogun a director.
Active in South Africa, Nigeria and Namibia.
www.adoairgroup.com
Airquarius
Founded in 1997 operates Fokker, Boeing and BAE Aircraft as well as four helicopters.
www.airquarius.com
ExecuJet
With a fleet of 50 business jets and turboprops in South Africa it claims to be the country’s largest
operator. In 2011 30%of Execujet Africa was sold to Simang Group, a Black Empowerment
Enterprise.
National Airways Corporation (NAC)
Established in 1946 as a charter company it claims to be the largest general aviation company in
Africa. The company is 62% owned by Johannesburg Stock Exchange listed Imperial. NAC is an
independent representative for Bell Helicopter, a dealer for Robinson Helicopters, distributor for
Piper, Diamond and Daher-Socata.
Stargate Aviation
Chris Perry
+27 (0) 11 468 478
Working with UK operator Hanger8.
SwiftFlite
Specialises in business jets operating three Falcons, a Challenger 300, a Gulfstream G2, aLearjet 45,
several Citation Sovereigns and turboprops.
www.swiftflite.co.za