AIP Capital, an alternative investment manager, has partnered with Monroe Capital, an asset management firm, to acquire a diversified aircraft leasing portfolio valued at up to $1bn.

The portfolio will consist of mid-life aircraft leased long-term to airlines worldwide.

Under the agreement, Monroe will provide the investment capital, while AIP Capital will serve as the asset servicer.

Monroe Alternative Credit Solutions co-head and managing director Aaron Peck said: “We are pleased to partner with AIP as we expand our asset-based finance business into the aviation sector.

“This venture reflects our strategy of aligning with experienced operators in sectors with strong asset fundamentals and long-term demand visibility. We believe aviation is a natural extension of our platform, and this venture positions us to deliver attractive, risk-adjusted returns for our investors.”

To facilitate the acquisition, Monroe has secured $500m in commitments from Deutsche Bank New York Branch and Fifth Third Bank through a senior secured warehouse facility.

AIP managing partner Jared Ailstock said: “We are excited to announce this partnership with Monroe Capital Alternative Credit Solutions. This venture provides scalable and stable capital; critically, it enhances value to our global airline customers and lessor trading partners even as capital markets have increased volatility.

“We look forward to scaling this venture over the coming months with Monroe, one of the most trusted firms in asset-based finance.”

Gibson Dunn acted as transaction counsel and PwC served as tax advisor for AIP Capital. Milbank provided transaction counsel, and KPMG acted as tax advisor for Monroe.