Sydney-based private credit fund, Colter Bay Capital, has successfully executed its debut investment, orchestrating and leading a substantial $115 million senior secured facility for Vertical Aviation. This significant transaction marks a crucial milestone for Colter Bay Capital, which only launched in March of this year, and underscores its immediate impact within Australia’s financial landscape. Vertical Aviation, recognized as one of Australia’s largest privately owned aviation groups, will leverage this three-year facility to refinance its existing bank debt and secure essential growth capital. This capital infusion is earmarked for strategic aircraft acquisitions and further mergers and acquisitions (M&A) activities, propelling Vertical Aviation’s expansion ambitions.
While Colter Bay Capital typically targets loans ranging from $5 million to $20 million, this inaugural deal with Vertical Aviation demonstrates its capability to syndicate and fund significantly larger transactions. The firm’s core strategy centers on addressing the estimated $25 billion funding gap prevalent in Australia’s lower mid-market, a segment comprising approximately 26,000 businesses generating between $3 million and $20 million in EBITDA. At its inception, Colter Bay Capital successfully secured $100 million in institutional liquidity from a prominent domestic fixed-income manager, further bolstered by support from a Gstaad-based Swiss family office.
Mark Wang, co-founder and managing director of Colter Bay Capital, highlights that the Vertical Aviation transaction exemplifies a growing trend: established businesses are increasingly seeking funding structures that can genuinely support their future growth trajectories and acquisition strategies. Wang emphasizes, "Founders are increasingly looking for funding partners that can support where they’re going, not just where they’ve been." He praises Vertical Aviation as a well-established Australian enterprise, distinguished by an experienced management team, robust underlying operations, and a clear growth strategy. Colter Bay Capital’s role, according to Wang, was to thoroughly comprehend this strategy and then construct a tailored capital solution to facilitate it.
Vertical Aviation operates across various segments of the Australian aviation market, delivering specialized helicopter and aviation services. The company boasts Australia’s largest deployed fleet of utility helicopters, providing critical support in vital sectors such as mining, energy, agriculture, utilities, emergency response, and remote infrastructure. Recently, Vertical Aviation expanded its footprint through the acquisition of Meridian Helicopters’ energy division, which now operates as Vertical Aviation Energy, primarily based in Queensland and South Australia. The group also encompasses HM Air and Heliwest Group, further solidifying its comprehensive presence.
Sam Chisholm, managing director of Vertical Aviation, expressed that the new facility provides the group with crucial financial flexibility to continue investing in its national operations and actively pursue further growth opportunities. Chisholm stated, "Vertical Aviation has grown significantly, and we have ambitious plans for the business." He added, "The new facility gives us the capital and flexibility to continue investing in our fleet, our people and further growth opportunities as they emerge." Chisholm underscored the importance of a funding structure that aligns with the company’s future vision, noting, "We wanted a funding structure that reflected where the business is heading and could support the next phase of that growth. Colter Bay took the time to understand our strategy and worked with us to develop a solution that met those requirements."
This $115 million senior secured private credit facility, with its three-year term, reflects a broader trend of private credit gaining increasing traction in Australia. Despite its growing momentum, the asset class remains in its nascent stages when compared to its global counterparts. For instance, private credit in the Asia-Pacific region accounts for merely 0.2 percent of total credit, a stark contrast to the 7 percent observed in the United States.
Wang reiterates that while Colter Bay initially focused on providing loans between $5 million and $20 million, the Vertical Aviation transaction powerfully demonstrates the firm’s robust capability to "structure significantly larger facilities by bringing together multiple sources of capital where required." He concludes by emphasizing Colter Bay’s fundamental principle: "We’ve always said our focus is solving capital problems for good businesses." Wang explains that sometimes this entails a $10 million facility, while at other times it necessitates the collaboration of multiple lenders to deliver a substantially larger solution. The critical element, he asserts, is "proactively engaging to understand the business, structure a solution that founders will support and bring together the appropriate capital to execute it." Wang further suggests that this transaction is illustrative of a wider structural shift occurring within Australian corporate lending, highlighting that "corporate private credit [is] becoming a much larger part of Australia’s funding landscape." He views this deal as a prime example of this evolution, where private capital is deployed with thoughtful consideration and discipline to foster the growth of established, founder-led Australian businesses.
