Santulli spots gap in market once again

Cantillon: sale of Milestone Aviation another coup for US entrepreneur

Milestone Aviation prospered on the trend towards more marginal locations in exploration industries.

Milestone Aviation prospered on the trend towards more marginal locations in exploration industries.

 

It looks like Richard T Santulli has done it again. Some 30 years ago the US entrepreneur pioneered the concept of time-share or “fractional” leasing of executive jets when he bought out a small charter company. The idea was simple: if your ego wanted a jet but your bank account wasn’t quite big enough, you could lease a share in one with others.

The idea became Netjets and took off. Santulli sold it to Warren Buffet’s Berkshire Hathaway for $725 million in 1998.

He may have pulled off a similar coup this week. GE subsidiary Gecas, more or less the world’s biggest aircraft financier, has agreed to buy Milestone, a helicopter lessor set up by the Netjets founder in Dublin four years ago, for €1.4 billion.

Many might regard helicopters as Celtic Tiger playthings, but they generally do far more useful work than ferrying over-leveraged developers to the K Club. They are heavily used by the oil and gas and mining industries, for example. And as the mining and exploration industries move to increasingly marginal and difficult locations, the demand for these craft will grow. Santulli and his colleagues spotted this four years ago and joined forces with private equity players Jordan Co and Nautic Partners to make a business out of it.

Gecas obviously thinks this is a business on an upward growth trend. The €1.4 billion it is prepared to pay for Milestone is around twice what its parent, GE Capital, sold its Scandinavian consumer banking business for in June.

That is comparing apples with oranges, of course – the assets and income streams involved are different – but it gives some idea of where GE ranks the Dublin lessor.

Interestingly, on the basis that Gecas paid is paying €1.4 billion for Milestone’s $2.8 billion of assets, Waypoint Leasing, the Limerick-based helicopter lessor backed by the Soros family, would be valued at €315 million.

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