The Aviation Investival Korea

Mar 21, 2019
FKI Tower Conference Center, Korea
founding partner

The only dedicated Korean aviation investor event returns to Seoul in March 2019 with some new twists and surprises

This one day conference brings investors and senior professionals from the wider industry together for a series of interactive sessions and panel discussions designed to ignite new investor interest and drive the development of the Korean aviation finance market.

Aviation Investival: Korea is the place to connect with people you need to meet to discover new sources of funding, win new mandates and stay ahead of developments in the Korean market.

 

Confirmed airlines

Meet over 50 institutional investors including

Acuon Capital
CarVal Investors
Dance & Novel Company 
Fubon Hyundai Life
G&A Private Equity
Heungkuk Asset Management
Heungkuk Fire & Marine Insurance
Heungkuk Life Insurance
Hyundai Capital
IBK Capital
KB Insurance
KDB Capital
KTB Investment & Securities
Kyonwon Invest

LOTTE Insurance Co.
Meritz Fire & Marine Insurance
MG Community Credit Cooperatives
Mirae Asset Securities (HK) Ltd.
National Pension Service Korea
NHLIFE
Pantheon 
Samsung Fire & Marine Insurance Co.
Samsung Life Insurance Co.
SBI Savings Bank
Shinhan Capital
Shinhan Financial Group GIB
Shinhan life 
Tongyang Life

Plus many more!

 

Featuring the leaders of the industry 

  

 

Tailored content for your business

Due to popular demand we’re expanding the conference this year, introducing multiple content streams tailored to difference experience levels.

Our specialist Investor masterclass is back, designed to take Korean investors to the next stage of their aviation investment journey and analyse a broader range of investment opportunities. Plus, a new wider market stream for experienced aviation finance professionals focused on problem solving to evolve this market.

 

The topics that matter most

  

 

Why Attend

 Capped attendance to facilitate more intimate networking and foster candid discussion 

 Our interactive sessions make it easier for attendees to share and collaborate 

 Dedicated investor and wider market streams adding more value for attendees 

 New! Deal zone: a dedicated business lounge to facilitate meetings  

•  Previous attendees rated our 2018 Korean conference: • 


 

Plus, over 90% of 2018 attendees were investors including: 

Heungkuk Asset Management • Hyundai Asset Management • KTB Asset Management
 Hana Financial Investment • Samsung Fire & Marine Insurance • G&A Private Equity 
BNK Securities Co Ltd • ABL Life Insurance • Samsung Life Insurance • IBK Capital 
Hyundai Marine & Fire Insurance Co Ltd • Vogo Fund Asset Management • HANA Life 
Shinhan Investment Corp • Hyundai Capital • HK Fund • Mercuria Investment Co
Korea Investment Management • Heungkuk Fire & Marine Insurance • SBI Savings bank
NongHyup Life Insurance Co Ltd • Military Mutual Aid Association • MERITZ Fire & Marine Insurance Co Ltd

 

  

한국 항공 투자자들을 위한 특별한 이벤트가 새로운 변화와 놀라움으로 2019년 3월, 서울에서 다시 개최됩니다. 

단 하룻동안 진행되는 이번 컨퍼런스에는 다양한 항공산업 분야의 투자자와 시니어 전문가들이 여러 번의 토론 세션과 패널 세션을 진행함으로써 새로운 투자자들의 호기심을 유발하고 한국 항공 금융 시장의 발전을 유도합니다.

2018년 컨퍼런스는 70여명의 기관 투자자들이 함께 해 고객들에게 비교할 수 없는 만남의 장을 마련했으며, 최신 트렌드를 유지할 수 있는 통찰력을 제공하였고, 새로운 펀딩 자원을 발견하고 새로운 맨데이트(Mandates)들을 따냈습니

 

항공산업 리더들의 참여
    

 

고객의 비즈니스에 맞춘 콘텐츠

많은 수요로 인해 올해는 본 컨퍼런스 규모를 확장하게 되었으며, 참석자들의 서로 다른 경험수준에 맞게 다양한 콘텐츠를 소개할 예정입니다.

당사의 전문 투자자 마스터 클래스가 한국 투자자들이 항공 부문의 투자 여정의 다음 단계로 진입하도록 하며 더 많은 투자 기회를 분석할 수 있도록 설계되어 돌아왔습니다. 또한, 경험이 많은 항공 금융 전문가들을 위한 새로운 더 넓은 시장 섹션(Wider Market Stream)은 시장의 진화를 위해 문제 해결에 중점을 둡니다.
 

가장 중요한 주제들

    

본 컨퍼런스에 왜 참여해야 할까요

• 더욱 친근한 네트워킹을 도모하고 솔직한 담화를 조성하기 위해 참석인원 수를 제한하였습니다  •
  상호 대화 형식의 세션으로, 참석자들이 쉽게 정보를 공유하고 협력할 수 있습니다  
• 참석자들을 위해 더 가치를 높인 투자자 시장 섹션 및 더 넓은 시장 섹션(Investor and wider market streams) 
 새롭게 선보이는 “딜존”: 원활한 미팅을 위한 전용 비즈니스 라운지  
• 이전 참석자들의 2018년 한국 컨퍼런스에 대한 평가: 


2018년 참석자들의 90% 이상이 다음과 같은 투자자들이었습니다

흥국자산운용  • 현대자산운용 • KTB 자산운용
하나금융투자 •삼성화재• G&A  Private Equity 
BNK 투자증권• ABL생명 • 삼성생명 • IBK 캐피탈 
현대해상화재보험 • 보고펀드자산운용 • 하나생명 
신한금융투자 • 현대캐피탈 • HK 펀드 • 메리츠화재
한국투자신탁운용 • 흥국화재 • SBI 저축은행

 

Vijay  Jethwa
Vijay Jethwa
Director
Mizuho Securities USA LLC
Paul  Jebely
Paul Jebely
Managing Partner
Pillsbury Winthrop Shaw Pittman LLP
Min Serk Lee
Min Serk Lee
Vice President
Mirae Asset Securities
Peter Cha
Peter Cha
"Senior Manager & Chief Planning & Research Team Finance & Management Division"
Korea Aero
Antony  Snelleman
Antony Snelleman
CCO and Head of Global Risk
Aergo Capital
Brian McArdle
Brian McArdle
SVP Aircraft Trading
SMBC Aviation Capital
Brian Jeffery
Brian Jeffery
Managing Director
Stratos
Kalash  Pandey
Kalash Pandey
Vice President, IBD Structured Finance,
Goldman Sachs
David Um
David Um
MD & Head of Global Markets
Citi
Sang Hoon Kim
Sang Hoon Kim
"Head of Alternative Investment / Alternative Investment Divison Director"
Meritz Asset Management Co.
Jaehoon  Jo
Jaehoon Jo
Team Manager/Structured Fund Team
Heungkuk Asset Management
Eddy Pieniazek
Eddy Pieniazek
Head of Advisory
Ishka
Sean Cleghorn
Sean Cleghorn
Partner
Magi Aviation Capital
Cian Dooley
Cian Dooley
Founding Partner
Airborne Capital
Carter White
Carter White
Aviation Capital Group
Vinodh Srinivasan
Vinodh Srinivasan
Managing Director - Co-Head Structured Credit Group - Fixed Income Division
Mizuho
Ed Hansom
Ed Hansom
CIO
Sirius Aviation Capital
Ali Ben Lmadani
Ali Ben Lmadani
Managing Director
ABL Aviation
Richard Finlayson
Richard Finlayson
MD
Deutsche Bank
  Wider Market Investor Masterclass
08:30

Breakfast briefing: Understanding the Cape Town Treaty and aircraft repossession mechanics

Main room

09:15

Key note address: analysis of market headwinds

  • Is the aviation finance market showing signs of slowing down?
  • How should you invest through a downtown and how can you adopt defensive strategies?
  • What can we learn from previous cycles?

Main room

09:45

The Ishka Gameshow: discussing the future of the Korean aviation finance market

Main room

10:30

Networking break

Main room

11:00

The investor pitch: understanding Korean investor strategies

The session will kick off with two mini pitches promoting investment products...

Main room

Rationalising return requirements and bench marking aviation against other asset...

  • How is aviation performing against other alternative asset classes?
  • ...

    Room 2

11:30

Structuring and investment solutions to mitigate swap costs

1) Investing in end of life aircraft: what should investor consider?

&n...

Room 2

11:45

Brain box

Delegates will be split into smaller groups and tasked with finding actionab...

Main room

12:15

Lunch

Main room

13:45

13.45 Brain Box (cont)

What is the potential size and scale of the debt and equity markets in K...

Main room

Investing in portfolio transactions and equity

Room 2

14:15

How to set up a leasing platform and effective management strategies

Room 2

14:45

Case study: remarketing widebody aircraft

Room 2

15:15

Networking

Main room

Networking

Room 2

15:45

Deal Zone

Dedicated business lounge to facilitate business meetings

Main room

Spotlight on residual value assumptions: which legacy deals and aircraft investm...

Room 2

16:15

Investing in metal: thinking about aircraft as a cashflow investment

17:30

As Ishka's Aviation Investival returns to Seoul for 2019, official conference supporter, Airborne Capital, look back at the performance of the Korean Aviation market and the outlook for this market in the coming year.  

Korean Cross Border Investments in Aviation Assets:
A casual visitor to Korea can hardly miss the modern infrastructure and advancements  in technology – signs of an economy positioning itself at the forefront of the Fourth Industrial Revolution. The “Miracle on the Han” was based on an export driven economy and high savings rates – the very basis for Korean lending and investments into aviation. Decades of trade and fiscal surpluses have provided the Korean financial system with large pools of investible funds. These funds have been invested into different parts of the capital structure of aviation assets, encouraged by a regulatory environment that promotes cross border investments.

Korean banks have led several senior debt financings for global airlines, secured by liquid aircraft assets. The top tier banks have a well established aviation lending business, and are significant providers of debt. However, it is the interest in the Mezzanine and Equity tranches of this asset class amongst yield hungry Korean investors, which has been a more recent phenomenon. The Korean aviation investment interest is truly global; with the investment pool focusing on assets on lease to international carriers, especially those from the Middle East, managed by global lessors. In this respect, Korean investors have a geographically wider mandate as compared to the domestic / regional focused investment thesis of investors in other parts of Asia or even, the United States / Europe. Also, in contrast to the Japanese JOL/JOLCO market, where cash rich companies have invested in aviation assets with a view to better manage their tax liabilities, no such tax considerations drive the Korean market.

Investors in the Korean Market:
The Korean mezzanine and equity markets have a broad base of investors - both life and non-life insurers, as well as several pension funds covering various sectors of employees such as military personnel, teachers, public servants etc. The crowding of investments into the domestic real estate markets, have pushed down yields and  prompted investors to look at offshore opportunities, particularly in non-correlated and steady annuity return assets including infrastructure, real estate and aviation. While Korean investors have a history of investing in cross border assets, almost exclusively in the developed markets, aviation is a relatively newer asset class, but one that has been steadily growing . The Korean market has a well developed eco-system of investment banks & securities companies, who have worked with both international lessors and airlines, in deploying equity and channelizing senior and mezzanine debt into aircraft assets. Asset Management firms, with specialized aviation expertise, are responsible for the structuring and setting up of domestic funds, through which these investments are funded. 

One segment of investors who have relatively less exposure to the Korean aviation market has been retail and high net worth investors. Quite a few players have been evaluating this segment, with potential upcoming transactions likely to be underpinned more on the credit of the airline, rather than the asset risk. 

Preferred Airlines:
A much noticed feature of Korean equity interest has been their preference for Middle eastern flag carriers - in particular, Qatar, Etihad and Emirates. The geo-political dynamics of the Middle East market, did not dampen investors interest, as evidenced by the recent financing of the latest Qatar Airways B777-300ER towards the end of 2018. We have recently seen a widening of targets, evidenced by Korean investment into a Dreamliner leased by the European travel group TUI. However, Korean interest still continues to be focused on state owned / controlled flag carriers, mostly from the developed markets, mirroring the interest of Korean investors in other alternative assets including Real Estate and Infrastructure. 

There is a growing interest amongst aviation investors to find the balance between an investment in single credit aircraft transactions, typically a widebody aircraft leased to a strong credit lessee, and one in a diversified portfolio of very liquid aircraft with a multitude of airlines, including some which are less attractive credits.  Quite a few Korean investors are evaluating the diversified investment opportunity and have been able to transition successfully from a credit-driven analysis to a portfolio asset-driven analysis.

Preferred Aircraft Types:
Wide bodied aircraft and a credit driven theme continue to be the preferred investment asset, with a marked preference for in-service new generation liquid aircraft – Airbus A330s (the -300s scoring over the -200s), Boeing 777-300ERs, Boeing 787 Dreamliners and Airbus A350s. Spreads in the more liquid narrow body aircraft are relatively low to be able to support the yield expectations of Korean investors. Regional Jets and Turboprops such as ATR have yet to attract interest from lenders, who still shy away from these aircraft. But as the liquidity and spread of these regional aircrafts is better understood by banks in Korea, we would expect these aircraft types to attract greater lending interest in the coming year. 

Investors’ interest in A380, which was a popular aircraft type for few years, has been on the ebb, with focus now on the aircraft re-delivery / re-lease market. The early A380s coming off lease in the recent past have offered interesting test cases of the likely re-marketability of these aircraft. The recent announcement by Airbus discontinuing production of this model, has probably cast a shadow on the prospect for this aircraft type. 

The Korean market also witnessed a Euro denominated finance lease transaction in early 2019, by Emirates with a local securities house for financing their A380s. This financing structure was unique and saw the Korean market hedging Euro lease rentals.

ABS Portfolio Equity Notes:
Last year was remarkable in the successful placement of the equity tranches of an ABS transaction entirely in the Korean Market, thus reinforcing the appetite after the last such transaction in Korea in 2016, for equity notes of a portfolio of aircraft. This transaction - christened Kestrel - was collateralized by cash flows from aircraft leases to 18 aircraft, with 15 airlines from 13 countries. The senior A & B tranches cumulating $379.4 Mn was placed among ABS investors, while the entire equity tranche of $160MN was placed in the Korean market. This transaction was closed in December, during a period of high volatility in the international credit markets, and success of the ABS issuance was in part, credited to the successful placement of the E-Notes with Korean investors. Expected larger volumes of aviation ABS transactions globally, coupled with increasing appetite for E-Notes by Korean investors, point to several other such potential transactions in the coming year.

Warehouse facilities and Pre-Delivery Payment Financings:
Looking forward to 2019, warehouse facilities - uncommon in Asia, but part of the product suite of global aviation banks - are likely to be explored by Korean lenders. This year could also see interest in Korean banks providing financing for Pre-Delivery Payments (PDP), again a rarity in these markets. 

Korean Won / USD Dollar Hedging Issues:
Any comment on the prospects for the aviation market, would be incomplete, without at least a reference to “hedging costs”. The cost of hedging USD receivables into the local currency is subject to the USD/KRW basis and the interest rate differentials between the two currencies. While the Federal Reserve hiked USD interest rates by 2% over the last 2 years, the Korean Central Bank was more circumspect with only 2 hikes of 0.25% each in the corresponding period. This differential in interest rates, coupled with the “basis swap cost” results in net effective KRW interest rates that are 1-1.5% per annum lower than the corresponding USD coupon. A requirement to necessarily hedge offshore investments back into Korean Won, meant that this was a cost that could not be avoided, but could only be managed by hedging for appropriate tenors and rolling over the hedge on maturity. 

With a weaker outlook for growth prospects around the world, including in both the United States and Korea, we would expect the interest rate differential to be stable in 2019, reflecting in stable or lower hedging costs. Ishka has sought to shine some light on this cost and potential hedging strategies, by having a dedicated session on currency hedging at the Seoul Investival.

New Korean Airlines:
While the focus has been on Korean lenders and investors working with airlines across the globe, new airline permits awarded to Air Premia, Aero K and Fly Gangwan seeks to introduce competition into the Korean market, in the no-frills low cost segment. While Korean Air’s and Asiana’s duopoly in the full service segment remains unchallenged, the new entrants are focusing on different strategies within the low cost market. Air Premia is looking at the hybrid medium & long haul model, using wide body B787-9 Dreamliners. Aero K and Gangwon are using the more traditional narrow body A320s and B737-800s, for domestic and regional services. 
 

2019 – Potential Headwinds:
The positive outlook for the aviation market could be threatened by a host of global or local factors. Financial health of the global aviation industry, in particular airlines that are a part of Korean portfolios, will have an impact on the appetite of Korean investors. Locally, foreign exchange hedging costs continue to drag down returns, and any unexpected jump in hedging costs, could reduce the attractiveness of not just aviation, but also other offshore alternative investments.
 

FKI Tower Conference Center

Yeoui-daero

Yeongdeungpo-gu, Seoul (07320), Korea

Event enquiries

Phone: +44(0) 2031766396

Email: [email protected]

Ishka - The Aviation Investival Korea
Diamond Room
3rd Floor

FKI Tower Conference Center

The Aviation Finance Festival

26 - 27 June, 2019

Join the headliners of the aviation finance community for two days of incredible content, expert analysis and relaxed networking.


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