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Tasameem JV with private jet company

XOJET has secured nearly $2.5bn in debt and equity financing from investors, including private equity firm TPG, at the same time as agreeing a separate joint venture with Tasameem Real Estate to establish a presence in Abu Dhabi.

Business jet company XOJET has formed a joint venture with Middle East real estate investment firm Tasameem in a bid to tap into the region’s growing market.

It comes as XOJET again received debt and equity commitments from private equity firm TPG as part of a $2.46 billion (€1.6 billion) growth financing round.

“This record-breaking financing round really is a game-changer for XOJET,” XOJET’s chief financial officer and international operations president, Eilif Serck-Hanssen, told PERE. “It really makes our balance sheet among the strongest in the industry, which is very important.”

The financing means XOJET can expand its operations outside the US, and set up a base at Abu Dhabi International Airport. Serck-Hanssen said the airline would start operating flights in and our of the Middle East region by the fall.

The chief financial officer also said the financing deal meant XOJET – which will use the capital to fund the vast majority of its fleet – won’t have to tap capital markets to allow growth for at least two to three years. “For us, probably the next big transaction will be an IPO, but an IPO for us will be a liquidity event as opposed to a financing event, which gives us the advantage that we can go to the market when the market is right.”

XOJET enlisted Morgan Stanley approximately three months ago to help it raise some $75 million in equity to strengthen its balance sheet, and planned to later look for debt financing to grow its fleet, Serck-Hanssen said.

But during its US and Middle Eastern road shows, “we experienced an enormous amount of demand for our paper and for the business opportunity, so we decided to [increase] the equity from $75 million to $85 million, as well as lock down about $2.4 billion in debt financing”.

Some $964 million in debt and equity has been made immediately available by TPG, XOJET founder Paul Touw, alternative asset manager White Oak Global Advisors and Export Development Canada (EDC). The EDC, a government-owned entity that offers financing for Canadian exporters to expand international business, joined the consortium because XOJET has 80 aircraft on order from Canadian plane manufacturer Bombardier. 

The investor group will provide an additional $1.5 billion later this year upon launch of the joint venture with Tasameem, which recently acquired London's Michelin-starred restaurant Hakkasan, and has invested in the Hard Rock Hotel real estate project in Dubai. The JV will see the development of a hub at Abu Dhabi International Airport, with the company expected to expand operations into Europe and possibly Asia and South America in the coming years.

“A significant portion of the equity is coming from Tasameem, but it’s important to note that TPG and XOJET founder are also investing” equity, said Serck-Hanssen.

TPG and Lehman Brothers Global Principal Strategies in September invested $363 million in XOJET. The two firms provided $143 million in debt and equity financing, while Lehman gave an additional $220 million for aircraft lease financing.

“XOJET’s business model is changing the industry as it continues to outperform our expectations,” David Bonderman, TPG founder, said in a statement.

XOJET currently has 127 aircraft and aircraft orders valued at more than $3.1 billion. The San Carlos, California-based firm noted that business jet travel demand is growing rapidly both in the US and abroad.

TPG has a long history investing in aviation, including one of its first and most famous deals: the turnaround of Continental Airlines.