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Updated at 5.57pm
IRISH AIRCRAFT-LEASING FIRM Avolon launched on the New York stock market today after being valued at $1.6 billion (€1.28 billion).
The company, which was founded in 2010, yesterday sold 13.6 million shares for a total of $272 million (€218 million) in its initial public offering.
The shares initially sold for $20 apiece – slightly below the $21-$23 it had previously quoted investors – ahead of the company’s trading début.
However by lunch in New York the price had dropped about 7% and was sitting below $19 after what, over the past 4 years, had been the biggest capital-raising exercise by any Irish company since before the recession.
The Dublin-headquartered company already owns or has committed to buy 236 aircraft, including 73 of Boeing’s next-generation 737-800s and 35 of Airbus’s latest, fuel-efficient A320s and A330s.
As of March this year, the company owned 105 planes worth $4.4 billion. Its customers include Ryanair and American Airlines, and it currently operates offices in China, Dubai, Singapore and the US.
A lucrative trade
Avolon was founded by Clare-born leasing entrepreneur Dómhnal Slattery, now the company’s chief executive, and it has has raised over $7.5 billion from investors since 2010. Yesterday’s share sale came from stockholders which include the Singapore government.
The company previously knocked back a bid from Chinese state investors which came after the company first applied for its New York listing in June.
Aircraft leasing has become an increasingly lucrative business with the rise of fast-growing budget airlines like Ryanair, which need extra planes but don’t want to invest the billions required to permanently expand their fleets.
About two-fifths of all large planes in commercial use are leased and several of the industry’s major players, including AWAS and AerCap, are also based or have significant operations in Ireland.
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Good luck to them
That little plane is way too small.
“It needs to be at least five times that size” – Derek Zoolander.
The future of air travel is shrinking people down so that they fit into smaller planes
Nothing more certain than begrudgers.
No company is obliged to hire people for the sake of it. Hiring people is a consequence not an aim. I hope these guys make lots of money.
Companies like these are the reason why Irish economic data is completely unrelated to actual economic activity.
How many jobs will be created in Ireland by this company? Probably less than 100.
It’s revenues will routed through Ireland for tax purposes and if it does a huge deal the GDP and GNP figures will spike upwards and that will be hailed as evidence of economic recovery. A company with less than 100 employees distorting the true picture.
Meanwhile in the real economy, qualified bricklayers are being forced to work for less than minimum wage; JobBridge and Gateway schemes grow like a cancer demolishing entry level jobs in public and private sectors; only the highest paid get any benefit from the recent budget; and emigration continues apace.
I really wish journalists would adopt some form of critical eye towards ‘news’ like this. These announcements need to be closely interrogated to see just how ‘good’ the news actually is. In this case it’s nowhere near a good news story. Unless you are an investor in this company.
Maybe less than 100 jobs but highly paid jobs which fuel other activity in the economy. Their executives eat out at local resturants, buy clothing at local stores, pay local people to mow their lawns and clean their houses, send their children to after school activities run buy locals. The multiplier effect tends to be larger for these positions then low paid jobs which just pay the rent and grocery bills.
They do indeed. But which is better for our economy?
A firm employing 100 well paid jobs or a retailer with half the valuation but employing 15,000 people with modest wages?
Bríd, I doubt it very much if those 100 jobs will be all that highly paid, to be honest. They’re more likely to be modestly remunerated back office jobs. The multiplier effect is interesting. It’s invoked here to support what is, in all likelihood, a tax ‘efficiency’ vehicle with very tenuous links to the actual Irish economy, but which will grossly distort the GDP and GNP figures, but the negative multiplier effect of massive cuts to public sector pay, social welfare and public investment are never discussed or their effects acknowledged.
Ciarán, you’re complaining about the assumed “distortion” of the country’s books by this company that you feel won’t generate sufficient remuneration for the Exchequer relative to that level of “distortion”? What a load of nonsense. You clearly have no clue of business and enjoy a very cosseted life within the public service paid for by people, like the owners of said company, who’ve risked all, had no safety net, pension or entitlement to social welfare. Now that they’ve succeeded, the country shall reward them by putting them on a the highest USC in the land, 11%. Higher than every State employee. For the rest of the self-employed, we’ll be working long after you kick back at 57 on your 50% defined benefits pension. Makes my blood boil when those with bulletproof public jobs crib about the private sector.
Diarmuid, instead of asking questions like “I wonder if…..”, why don’t you do some good research and find out? Then share the information with us all.
Because that would involve research….not much of it done around these parts.
Dublin based and valued at €1.6bn. I wonder if they pay any tax here.
They do at the standard rate. Great company doing great things. Ireland is a hub of the aviation leasing business and it employs loads of people.
Whose standard rate ?
The company is valued at €1.6 billion but owns planes worth €4billion? Something doesn’t add up there
The valuation is most likely only the value of the equity there is debt financing as well.
Diarmuid,
This is a company listed on the stock exchange. All its salient financial information has, not only to be freely available to the NYC and SEC, but to all investors and potential investors.
Why don’t you Google it?
What debt ? It says they raised over €7.5billion from investors since 2010
Investor capital is a liability on a company’s balance sheet – just like bank loans
Assets and valuation two v diff things. They borrowed over 6Bn so this would be one of many contributing factors!
If the company has a Market Valuation of $1.6 bn now after yesterday’s floatation and it raised over $7 bn from investors since 2010…some of the wording in article certainly presents a somewhat confusing picture.
Are banks providing loans actual investors in the company? A moot point! Not if they hold first-charge security over the planes, IMO – they’re investors in planes.
Avolon has probably already raised some capital in the Debt markets by issuing its own Corporate Bonds, and holders would definitely be classed as investors.
Anyway good luck to the guys behind this company. Another International success story by an Irish firm securing that NYSE Floatation.
Avolon has succeeded at the hurdle where GPA stumbled back in early 90′s.
If Avolon bod listens carefully to Michael O’ Leary’s more serious rantings it can become very successful.
Very volatile business.
Don’t forget how GPA was talked up and how it crashed to earth in a fireball.
Invest at your peril.
Cheers tom, was going to sink a few grand in but won’t now.
If the red thumbs would like to contact me I gave a few good investment ideas.
A fool and their money etc.
I never said anything against this company. I said it against the industry.
High risk and volatile.
With oil prices where they are at the moment, may not be the worst area to invest in!! Just saying
And this means what to the irish tax payer
have your say