This article originally appeared as part of our Helicopter Investor Weekly Newsletter. To read these stories first, subscribe to our newsletter here.
It is easy to be deterred from investing when a market is in a downturn. When a bad cycle comes around you don’t see many new faces coming in with new capital. But one company that says there’s advantage to bucking this trend is fund-management company Thora Capital.
Founded on the core principle, to “avoid cyclical investment”, Thora Capital was set up by Russell Christopher and Matthew Rothschild last year. The company strongly believes that there is a genuine opportunity for growth in the helicopter-leasing space long-term.
“Where we are in the cycle was not part of our strategy. It is what it is, but this is not what drove us to enter the helicopter market,” Russell Christopher told Helicopter Investor.
Last week, the fund-management company closed its first helicopter-funding round and revealed details of its second transaction. The first round was worth approximately $50 million, with cash contributed from family offices, high-net-worth individuals and RIAs.
It is now working on closing its second transaction for two utility helicopters which will be placed on long-term leases with Uniflight Global. Both aircraft will be operated by Aviation Services Unlimited.
When we asked Christopher why he decided to enter the market now, he replied: “Commercial aircraft leasing is a very mature and overcrowded space. The yields have come down and close to 50% of commercial aircraft are leased… If you look at the helicopter market, it is closer to eight than to 10%.
“Right now, there is a dearth of competition in the helicopter market, but this is temporary. Whilst we are enjoying a period where we have capital to deploy and others may not, markets change and fluctuate so this is not a core part of our strategy.”
Thora Capital is buying into a flat market, but aircraft are expensive to have sitting on the ground, so it is becoming increasingly more useful to lease the aircraft for specific operations when needed. Whilst the height of helicopter leasing has come to pass, there is still room for growth.
Speaking to Matthew Rothschild earlier this year, he told Helicopter Investor: “Until we launched Thora, the only way for an investor to access returns offered by helicopters was to invest in the equity of one of a handful of specialty finance firms dedicated to helicopter leasing.
“Thora intends to immediately distribute the cash generated from its investment in aviation leases and our closed-end fund structure provides a time-certain exit strategy for our capital partners.”
Whilst other investors might steer clear right now, Thora is thinking long-term. Its first fund has a nine-year life and there are other funds coming down the line. It is not limiting itself to the newest helicopters either, with the company also looking at the more-popular legacy aircraft models.