New $5bn Islamic Aircraft Leasing Fund Launched; Will Target GCC

Two Dubai-based financial firms, Quantum Investment Bank and Palma Capital, have been selected as the agents to launch a new shariah compliant aircraft leasing fund, called ALIF Fund.

The fund will be managed by the International Airfinance Corporation (IAFC) with Airbus and Islamic Development Bank (IDB) as investors and strategic partners, a statement said.

With a targeted size of $5 billion from a combination of equity and debt, the fund will focus exclusively on Airbus aircraft.

It will operate according to shariah principles and will purchase brand new and second hand Airbus aircraft to be leased to airline companies in the GCC and Organization of Islamic Conference member countries, the statement said.

“The objective of the fund is to achieve a risk adjusted medium to long-term capital appreciation while generating a quarterly cash dividend to investors,” it added.

The fund was launched in London on June 23, 2014.

“Airbus has been very successful in growing its market share in the MENA region over the last two decades and this innovative financing initiative will enable us to satisfy our customers’ financing needs even more effectively,” said Habib Fekih, president of Airbus for MENA & Africa who is also the chairman of the board of ALIF Fund.

Moulay Omar Alaoui, chairman of Palma Capital and president and CEO of IAFC added: “The establishment of ALIF Fund was derived from the strong interest of both investors and financiers for sharia compliant instruments that generate attractive and stable returns stemming from the ownership of commercial aircraft assets over an extended period of time.

“This is further reinforced by the inherently significant, growing need and demand for aircraft by airliners in the GCC and OIC member states.”

Airbus and rival US-based Boeing are vying with each other to win new deals from fast-growing airliners in the GCC such as Emirates, Etihad and Qatar Airways.

Earlier this month, Dubai-based Emirates canceled 70 orders for Airbus’ brand-new A350 aircraft, worth $16 billion at list prices. However, the carrier remains the biggest customer of Airbus’ jumbo A380 jet, with 140 planes on order.