#Japan #Tokyo #Mercuria Investment #Airborne Capital #Mach OE

Introduction

In a significant move within the aviation investment sector, Mercuria Holdings' subsidiary, Mercuria Investment Company (MIC), has collaborated with Airborne Capital Limited, an Ireland-based aircraft asset management firm, to establish an innovative open-end aircraft fund named 'Mach OE'. This initiative aims to broaden investment opportunities for domestic investors by evolving the existing closed-end fund model.

Background of the Aircraft Industry

The aviation industry has endured unprecedented challenges due to the COVID-19 pandemic, which caused disruptions across the globe. However, the demand for air travel has demonstrated a robust recovery, surpassing pre-pandemic levels, fueled by global economic growth. Despite this resurgence in demand, manufacturers face a supply shortfall as production rates have not adjusted sufficiently to meet the market's needs, leading to projections of aircraft shortages extending into the early 2030s. MIC has remained engaged in aircraft investment during these challenging times, accumulating expertise and capabilities to navigate this evolving landscape.

Investment Strategy of Mach OE

Since its inception in 2017, MIC has launched multiple aircraft funds—including 'Mach 1' in collaboration with Airborne Capital, marking Japan's first fund after the pandemic. The operational focus of Mach OE is to capitalize on high-demand aircraft assets while generating cash flow through leasing arrangements with creditworthy airlines. Notably, the open-end structure allows for flexible entry and exit options for investors, distinguishing it from the traditional closed-end funds that often lock investors into a predetermined timeframe.

Airborne Capital's Role

Airborne Capital currently manages a portfolio of around 50 aircraft across more than 20 countries, boasting substantial experience in operating aircraft investment and advisory. This deep expertise allows the firm to position Mach OE as a uniquely innovative offering within Japan's investment landscape, targeting institutional investors and high-net-worth individuals alike.

Daiwa Securities Group's Involvement

Daiwa Securities Group has been actively seeking to enhance clients' portfolio options in alternative investments. As of January 2025, through a joint venture with Airborne Capital, the group plans to present exclusive aircraft investment opportunities to ultra-high-net-worth clients. This collaboration, along with the partnership established with MIC and Airborne, aims to bolster access to lucrative investment strategies.

Leaders' Comments

Daiwa Kanpo Alternative Investments (DKAI), a Daiwa group company, will play a pivotal role in supporting Mach OE by introducing it to potential investors. Atsushi Katayama, President of DKAI, remarked on the firm's commitment to delivering tailored alternative investment solutions. "Our collaboration with MIC and Airborne is crucial in offering innovative investment opportunities within aviation," he indicated. Similarly, Toshihiro Toyoshima, President of MIC, highlighted the growing interest in aviation as a stable investment class, especially in light of inflation concerns.

Ramki Sundaram, CEO of Airborne Capital, expressed enthusiasm about launching Mach OE and underscored its significance as a pioneering open-end fund in Japan, designed to provide liquidity to investors while ensuring robust returns through a diversified portfolio of aviation assets.

Conclusion

Mach OE represents a transformative step for investors interested in aircraft leasing—merging stability and flexibility within Japan's evolving investment paradigm. The collaborative efforts between MIC, Airborne Capital, and Daiwa Securities Group reflect a commitment to innovation and responsiveness to investor needs, paving the way for a new era in alternative asset investment in the aviation sector.