AJW Partnership Targets Asset Acquisitions

AJW Group’s recent announcement of a joint venture (JV) with a U.S. investment firm points to a wider industry trend of more partnerships as aftermarket players look to utilize long-term opportunities post-crisis. 

The UK-headquartered aftermarket specialist confirmed the JV with Arena Investors last week and says it will focus on acquisitions of commercial aircraft, engines and components. It will be funded with committed capital of up to $100 million with Arena serving as the majority investor while AJW will take a minority stake.

Initial discussions between AJW and Arena, an affiliate of Canada-based investment group The Westaim Corp., took place at a meeting in New York with Arena’s senior team in Oct. 2019. Talks around the formal JV structure began in April 2020.       

The JV will begin operating this month as a new entity from Dublin, Ireland and will primarily focus on current-generation narrowbody engine types such as the CFM International CFM56-5B, CFM56-7B and IAE V2500. However, it will also look “opportunistically” at other types such as the Rolls-Royce RB211, GE CF6 and GE90, says Ian Malin, AJW’s chief financial officer. 

“The same will apply to airframes—we will focus on the highest demand components for current-generation Airbus A320 and Boeing 737 families with selected opportunities in newer generation assets on a case by case basis,” Malin says. “In addition to hard asset investing, the JV will look at secured loans, equity investment and certain M&A activity in the aftermarket space.”

The engines and components will be fed into AJW’s global inventory utilizing its Montreal-based repair business AJW Technique.

Malin highlights the difficult circumstances the global aviation industry is facing and says in this environment, capital efficiency is vital. He says the company is looking to position itself as a partner rather than a vulture capital entity capitalizing on distressed businesses. 

“The JV will offer solutions to customers enabling them to both monetize assets and, if required, retain access to the material customers need to sustain their operations and return to profitability at a lower cost,” he says. Material will be available through lease, exchange and power-by-the-hour programs.