by John Pletz | June 5, 2010 | Crain’s Chicago Business |

Jim Raff is swooping back into the aircraft market, looking for bargains and packing a $600-million bankroll from private-equity giant Carlyle Group.

He’s hoping to repeat the performance of his last fund, which successfully rode the industry’s bust and recovery cycle from 2004 to 2007.

“We think the time is right to start buying,” says the Chicago banker, who got his start 23 years ago lending money to United Airlines. Mr. Raff’s RPK Capital Partners hopes to leverage Carlyle’s funds to buy more than $1 billion in aircraft and engines or related bonds and debt.

He’s riding a wave of private-equity money flooding into the aircraft-leasing business on the theory that prices are nearing the bottom and will climb as aviation recovers. Connecticut private-equity firm Oak Hill Capital Management LLC and others invested $1.4 billion in Avolon, an aircraft leasing venture based in Ireland; San Francisco-based Jackson Square Aviation LLC raised $500 million from Oaktree Capital Management L.P.

The capital is crucial to the continued rebound of plane makers like Chicago-based Boeing Co. Its airline customers must sell off older planes before they can buy new ones like the 787. But more cash for leasing firms also means more competition for deals. “The biggest risk is if they’re all in a giant rush to invest that money in transactions that don’t make sense,” says Glen Langdon, CEO of Langdon Asset Management Inc. in San Francisco, which buys and sells aircraft.

Washington, D.C.-based Carlyle is making its first foray into aircraft finance, betting big on Mr. Raff and partners Paul Redman, Robert Gates and Chris Chaput. “We liked Jim’s strategy and approach,” says Adam Palmer, a Carlyle managing director. “When combined with his track record through the last cycle, we decided to partner with him and his team.”

Mr. Raff grew up in rural Connecticut and came to Chicago in 1987 as a lender for AMRO Bank. He later worked for Denver-based aircraft-leasing company Republic Financial Corp. and Boston-based BTM Capital Corp. before returning to Chicago in 2004 to start RPK Capital, a $200-million fund.


 

Photo: Erik Unger