One of the biggest names in distressed investing is poised to expand its bet on the aviation industry as fresh chaos hits airlines around the world.

After spending $2.5 billion on aircraft-related investments in the past 18 months, SVPGlobal is increasing its team of specialists to seek out more deals in the sector and to expand operations across the supply chain, according to founder Victor Khosla.

The $18 billion firm, which focuses on private credit and distressed investments, sees continued disruptions hitting airlines that are grappling with staffing shortages and high fuel costs after a costly pandemic.

SVP acquired around 30 planes from bankrupt entities during the Covid-19 era, with about 20 coming from a restructuring of Latam Airlines Group SA that also saw it become an owner of the company. 

After acquiring lessor Deucalion Aviation in full this month, SVP expects to generate returns by buying, selling and leasing planes while supplying parts and services to airlines.

“With Deucalion, we have the capacity for really full-service aircraft management now,” said Greenwich, Connecticut-based investor Khosla in an interview.

Ongoing Obstacles
The firm’s new hires are John Morabito, Ben Pughe-Morgan and Matthew Eddy, all formerly of investment firm EnTrust Global.

Airlines endured a deep financial shock when early pandemic restrictions killed demand, and many struggled to recover even as travel resumed. The worst pain was only visible in private credit and direct loans, said Khosla.

“In the private part of the sector, debt got beaten up,” Khosla said in an interview. “We were buying it from banks all over the world.”   

The private debt market consists of financing made bilaterally to companies by individual or small groups of asset managers. Little transparency exists regarding the current value of loans, as they don’t trade in the public markets and holders are largely free from disclosure requirements.

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