777 Partners' aviation asset arm plans to invest up to $200 million in suppliers

By Abhijith Ganapavaram

(Reuters) - AIP Capital, the aviation asset management arm of 777 Partners, plans to invest up to $200 million in small and medium aerospace suppliers by the end of next year, at a time when the lower rungs of the supply chain are facing financial difficulties.

The investments may include a first lien loan, and a single investment will range between $10 million and $30 million, AIP Capital Managing Partner Mathew Adamo told Reuters in an interview.

AIP, which was launched earlier this week, has entered into a servicing agreement with 777 Partners to manage all commercial aircraft owned by the private-equity firm. AIP's management team owns 51% of AIP and 777 holds the rest.

Stamford, Connecticut-based AIP said supply chain investments would focus on companies in developed countries. It is targeting to raise $300 million to $500 million by the end of this year overall for private credit investments.

Though the amount is small when compared to overall private equity investments, AIP's move underscores the growing interest in aerospace supply chain, which is working to increase production to support a huge aircraft backlog.

But small aerospace suppliers have been hit hard by high interest rates and labor costs, sparking concerns that there may not be enough supplies to support jet output hikes at planemakers Boeing Co and Airbus SE.

The banking crisis that began earlier this year exacerbated concerns about bank loans drying up for suppliers, opening up an opportunity for private-equity firms to bridge that gap.

Miami-based 777 invests in various sectors, including insurance and aviation. Last year, it had placed a firm order for 30 narrowbody 737-8-200 jets.

(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Shilpi Majumdar)