ADIA and partners establish $1.4 billion aviation venture

Abu Dhabi Investment Authority has joined I Squared Capital and aircraft lessor Avolon to establish Constellation Aviation, a leasing investment platform expected to acquire 22 aircraft valued at $1.4 billion.

The agreement, announced on 2 November, brings together a wholly owned subsidiary of the Abu Dhabi sovereign wealth fund, the Miami-based infrastructure investor and Dublin-based Avolon. The initial aircraft portfolio is already leased to 17 airlines across 15 countries, providing the venture with an established base of contracted rental income.

Avolon said the aircraft have an average age of approximately five years and comprise modern, fuel-efficient models. Their transfer to Constellation is expected upon completion of the transaction, which remains subject to regulatory approvals. The partners have not disclosed their respective ownership percentages, investment commitments or an expected completion date.

Avolon will retain a minority equity interest while acting as the platform’s exclusive aircraft manager and servicer. That arrangement allows the lessor to continue overseeing the aircraft and their airline relationships while bringing external institutional capital into its asset management operations.

The venture will be supported by a syndicated debt facility involving international banks. BNP Paribas, Crédit Agricole Corporate and Investment Bank, Société Générale, ING, MUFG and Mizuho are joint lead bookrunners. Mizuho is also serving as financial adviser to the investors. The facility’s size and financial terms were not announced.

Ross O’Connor, Avolon’s chief financial officer, said the arrangement would expand the company’s asset management business by combining investors’ long-term capital with its leasing, servicing and asset management capabilities. He described the partnership as evidence of institutional investors’ confidence in aviation assets and Avolon’s ability to manage them.

For ADIA, the investment offers exposure to aircraft leasing through an infrastructure-oriented structure rather than direct airline operations. The fund invests on behalf of Abu Dhabi’s government, while I Squared Capital specialises in infrastructure businesses across several sectors, including transportation and logistics.

Khadem AlRemeithi, executive director of ADIA’s infrastructure department, said demand for modern aircraft supported the sector’s growth. He said Constellation brought together investors and an established aircraft operator to address that demand.

Gautam Bhandari, I Squared Capital’s co-founder, managing partner and global chief investment officer, pointed to manufacturers’ extended order books as an important consideration for airlines seeking additional capacity. He said Avolon’s substantial commitments to Boeing and Airbus gave the partnership access to aircraft procurement and leasing expertise.

The companies expect Constellation to increase its portfolio over time, although they have not publicly set a binding expansion timetable. They identified growing passenger demand, constrained aircraft manufacturing capacity and airlines’ reliance on leasing to finance fleet renewal as factors supporting their plans.

Aircraft leasing allows carriers to operate aircraft without bearing the full initial purchase cost. For investors, leases can generate contractual payments over extended periods, although returns remain exposed to airline creditworthiness, aircraft values, financing costs and changes in demand.

The aircraft portfolio’s geographic spread means lease payments are associated with multiple carriers and national markets rather than a single airline. Nevertheless, the companies have not identified the individual airlines or aircraft types included in the initial transfer. Nor have they published the average remaining lease term or expected annual rental revenue, figures that would help investors assess the portfolio’s cash-flow profile.

The venture’s financing structure is also important because borrowing can increase investment capacity while adding interest expenses and refinancing exposure. The participating banks’ roles have been identified, but the partners have not specified the proportion of debt and equity financing for the initial acquisition.

The transaction also gives Avolon a mechanism to transfer aircraft into a separately capitalised investment vehicle while continuing to earn income from managing the assets. Such structures can enable lessors to recycle capital into additional aircraft purchases without relinquishing operational oversight of transferred fleets.

Avolon operates one of the world’s largest aircraft leasing businesses. As of 30 September 2026, it reported an owned, managed and committed fleet of 1,092 aircraft and relationships with 138 airlines in 62 countries. Its parent company is Bohai Leasing.

I Squared Capital manages more than $60 billion in assets and has investments across power, transportation, digital and other infrastructure. The firm operates from Miami and maintains an office in Abu Dhabi, alongside other international locations.

Milbank is acting as legal counsel to the investors, while Clifford Chance is advising Avolon on the transaction. The proposed initial portfolio consists of aircraft already in airline service, rather than newly ordered jets awaiting delivery.