Avolon launches aircraft leasing platform with ADIA, I Squared Capital

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Avolon launches leasing platform

Highlights

Avolon launched Constellation Aviation with I Squared Capital and ADIA, seeding the platform with 22 aircraft valued at $1.4 billion.
The initial portfolio comprises aircraft averaging five years old, leased to 17 airlines in 15 countries, offering investors contracted long-term cash flows.
Avolon retains a minority stake and exclusive management role, with ambitions to expand Constellation's portfolio to $6 billion, reflecting growing investor appetite for risk-sharing in aircraft leasing.

Platform structure and initial portfolio

Avolon announced on Monday, as reported by Reuters, that it has formed Constellation Aviation with I Squared Capital and a subsidiary of the Abu Dhabi Investment Authority, creating a new investment platform seeded with 22 aircraft from Avolon's existing portfolio.

The Dublin-based lessor says the initial portfolio is valued at $1.4 billion, with the aircraft carrying an average age of about five years and already leased to 17 airlines across 15 countries. The company says the venture is intended to give airlines access to fleet capacity while offering investors exposure to long-term contracted cash flows.

Avolon, which is owned by China's Bohai Leasing Co Ltd, retains a minority equity stake in the venture and serves as Constellation's exclusive aircraft manager and servicer as the platform expands over time. A source familiar with the platform says the longer-term ambition is to grow the portfolio to $6 billion.

Investor appetite and sector implications

ADIA is one of the world's largest sovereign wealth funds and the oldest of Abu Dhabi's three main government-controlled funds, investing on behalf of the emirate's government. Miami-based I Squared Capital manages more than $60 billion in assets, underscoring the scale of institutional backing behind the new aviation vehicle.

The transaction also reflects a broader pattern in aircraft leasing, where lessors are using partnership structures to share risk and tap outside capital. The world's number-two lessor, SMBC Aviation Capital, reached a deal last year to share the risk of acquiring U.S.-based rival Air Lease Corp for $7.4 billion through a newly established entity backed by a group of investors.

In our earlier article on the Philippine Social Security System’s equity portfolio performance, we explained how the state pension fund defended its strategy by highlighting P204 billion in realized gains and dividend income accumulated since 1968. The fund argued that recent unrealized losses are paper mark-to-market moves rather than cash losses, and emphasized a disciplined, diversified approach focused on income generation and long-term resilience.

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