"Röntgen" Investors Will Finance a Swedish Aircraft Repair Company
The crowdfunding platform "Röntgen" (UAB "Tre?ia diena") has signed a contract with the Swedish maintenance company "Advantage Aviation Services" for a loan of €0.8 million to fund a project involving the repair of five aircraft engines. This marks the first international investment project offered by the Lithuanian platform and the second venture into the aviation sector.
Although "Röntgen" specializes in real estate financing, last year’s successful project with the Lithuanian aircraft maintenance company "Colibri Aero" for engine repair and sale, along with investor demand for portfolio diversification, encouraged the platform to expand its activities in the aviation sector.
According to Gytis Juskys, "Röntgen’s" aviation project financing specialist, factors driving the platform's expansion into aviation include investor demand for portfolio diversification, a standardized international aviation legal framework, and the capital-intensive nature of the industry. Although the profitability of the aviation repair sector is quite high, small and medium-sized businesses in this sector still have limited access to traditional capital. Finally, the financing structure of aviation projects is similar to real estate: a large amount of capital is needed at the start of the project, but valuable assets can already be pledged, the funds are then used to improve the quality of the asset, and at the end of the project, a large amount of money is returned from the sale.
"The aviation sector has seen rapid growth in the years following the pandemic, with strong year-on-year growth in demand for flights, aircraft and parts. The legal aspects are also attractive to us in this area: we have never offered real estate projects abroad because each country has a specific market and a unique legal framework. But in the aviation segment, many issues are regulated by international conventions, so with this practice we can finance projects in many foreign markets without the risks of different legal frameworks. Also, for medium-sized aviation businesses, crowdfunding mechanisms are ideal. Few banks have aviation expertise and after Covid are still hesitant to finance these businesses, and bonds are not efficient for medium-sized players. Therefore, such companies develop their projects with their own funds, as well as with private debt or in partnership with other businesses. However, pledges of assets in international registers, a clear business model, a strictly regulated field, experienced market players and other aspects make aviation repair projects compatible with a crowdfunding structure and, in this case, with our platform's conservative strategy," comments G. Juskys.
During the investment project, the Swedish company plans to repair and then sell five used "IAE V2500" engines, which are used in popular "Airbus A320" and "Boeing 737" aircraft, within 12 months in the U.S. and Sweden. Currently, the Swedes already have preliminary agreements for the sale of two engines. In today's market, repaired engines are in high demand among aircraft operators or leasing companies. It is forecasted that the market value of all repaired engines will reach approximately €5 million.
"Lithuania has one of the most advanced and sustainable crowdfunding ecosystems in Europe, and Lithuanians are well-versed in this instrument. The crowdfunding structure is well-suited for our activities, and we were impressed by 'Röntgen's' business-oriented approach. We are confident that the project will be smooth and successful, and possibly not the last one," said Fredrik Rydeholm, a member of the board of the holding company "Advantage Aviation Services".
The legal aspects of this project were handled by the law firm "Averus", one of the most highly regarded aviation law firms in Europe. The valuation of the collateralized assets for the Swedish company was conducted by the British company "AviationValues", a global leader in aviation asset valuation.
According to Gytis Juskys, with successful experience in two aviation projects, "Röntgen" will continue to develop this area. "Our experience so far shows that the crowdfunding model is new but suitable and attractive to aviation segment businesses. It is paradoxical that in this highly regulated and profitable sector, there has been a rather limited choice of capital sources," said Juškys.
"Advantage Aviation Services Sweden AB" was established in 2013 and is engaged in aircraft maintenance, spare parts supply, and trading. Last year, the company's sales reached €13.7 million, with a net profit of €2.2 million.
"Röntgen" has been actively operating since 2017, during which time the platform’s investors have collectively raised over €76 million. Last year, "Röntgen" was the third-largest crowdfunding operator in Lithuania. In the first half of 2023, professional and retail investors on the platform raised a total of €23 million for real estate projects, an increase of 118% compared to the same period last year. The platform currently has a community of over 16,000 investors.
"Röntgen" Investors Will Finance a Swedish Aircraft Repair Company
The crowdfunding platform "Röntgen" (UAB "Tre?ia diena") has signed a contract with the Swedish maintenance company "Advantage Aviation Services" for a loan of €0.8 million to fund a project involving the repair of five aircraft engines. This marks the first international investment project offered by the Lithuanian platform and the second venture into the aviation sector.
Although "Röntgen" specializes in real estate financing, last year’s successful project with the Lithuanian aircraft maintenance company "Colibri Aero" for engine repair and sale, along with investor demand for portfolio diversification, encouraged the platform to expand its activities in the aviation sector.
According to Gytis Juskys, "Röntgen’s" aviation project financing specialist, factors driving the platform's expansion into aviation include investor demand for portfolio diversification, a standardized international aviation legal framework, and the capital-intensive nature of the industry. Although the profitability of the aviation repair sector is quite high, small and medium-sized businesses in this sector still have limited access to traditional capital. Finally, the financing structure of aviation projects is similar to real estate: a large amount of capital is needed at the start of the project, but valuable assets can already be pledged, the funds are then used to improve the quality of the asset, and at the end of the project, a large amount of money is returned from the sale.
"The aviation sector has seen rapid growth in the years following the pandemic, with strong year-on-year growth in demand for flights, aircraft and parts. The legal aspects are also attractive to us in this area: we have never offered real estate projects abroad because each country has a specific market and a unique legal framework. But in the aviation segment, many issues are regulated by international conventions, so with this practice we can finance projects in many foreign markets without the risks of different legal frameworks. Also, for medium-sized aviation businesses, crowdfunding mechanisms are ideal. Few banks have aviation expertise and after Covid are still hesitant to finance these businesses, and bonds are not efficient for medium-sized players. Therefore, such companies develop their projects with their own funds, as well as with private debt or in partnership with other businesses. However, pledges of assets in international registers, a clear business model, a strictly regulated field, experienced market players and other aspects make aviation repair projects compatible with a crowdfunding structure and, in this case, with our platform's conservative strategy," comments G. Juskys.
During the investment project, the Swedish company plans to repair and then sell five used "IAE V2500" engines, which are used in popular "Airbus A320" and "Boeing 737" aircraft, within 12 months in the U.S. and Sweden. Currently, the Swedes already have preliminary agreements for the sale of two engines. In today's market, repaired engines are in high demand among aircraft operators or leasing companies. It is forecasted that the market value of all repaired engines will reach approximately €5 million.
"Lithuania has one of the most advanced and sustainable crowdfunding ecosystems in Europe, and Lithuanians are well-versed in this instrument. The crowdfunding structure is well-suited for our activities, and we were impressed by 'Röntgen's' business-oriented approach. We are confident that the project will be smooth and successful, and possibly not the last one," said Fredrik Rydeholm, a member of the board of the holding company "Advantage Aviation Services".
The legal aspects of this project were handled by the law firm "Averus", one of the most highly regarded aviation law firms in Europe. The valuation of the collateralized assets for the Swedish company was conducted by the British company "AviationValues", a global leader in aviation asset valuation.
According to Gytis Juskys, with successful experience in two aviation projects, "Röntgen" will continue to develop this area. "Our experience so far shows that the crowdfunding model is new but suitable and attractive to aviation segment businesses. It is paradoxical that in this highly regulated and profitable sector, there has been a rather limited choice of capital sources," said Juškys.
"Advantage Aviation Services Sweden AB" was established in 2013 and is engaged in aircraft maintenance, spare parts supply, and trading. Last year, the company's sales reached €13.7 million, with a net profit of €2.2 million.
"Röntgen" has been actively operating since 2017, during which time the platform’s investors have collectively raised over €76 million. Last year, "Röntgen" was the third-largest crowdfunding operator in Lithuania. In the first half of 2023, professional and retail investors on the platform raised a total of €23 million for real estate projects, an increase of 118% compared to the same period last year. The platform currently has a community of over 16,000 investors.
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