Madhu Vijay is a soft-spoken giant in the global aircraft leasing industry. The 46-year-old CFO of Newport Beach-based Aviation Capital Group helped transform the company into a top 10 global commercial jet aircraft leaser with about $9 billion in assets leased to 90 airlines around the world.
“Madhu is a pioneer in the Aviation Finance market,” said Olivier Trauchessec, managing director and head of the transportation group of New York-based bank BNP Paribas, via a phone interview. Trauchessec has worked with Vijay and Aviation Capital for more than 10 years and said he’s always been impressed by Vijay’s capability to think creatively and to convince people to take different approaches.
Goals
Vijay said he had two goals when he joined Aviation Capital in 2001 as treasurer: diversify the company’s access to capital and focus on appropriate asset-liability management. He said his purpose was to lower its exposure to various types of financing risks and strengthen its ability to increase business.
In 2007, Vijay said he shifted Aviation Capital to an unsecured lending model. “I first met with credit rating agencies and helped them understand our business plan.”
Trauchessec said Vijay’s actions changed the aviation finance industry. By 2008, Vijay realized that his changes separated Aviation Capital from its competitors and helped it withstand the recession, he said.
He became Aviation Capital’s first CFO in 2013.
Vijay received the lifetime honors award at the Business Journal’s annual CFO of the Year Awards on Jan. 21 at Hotel Irvine (see related stories 1, 4, 12). Vijay said before entering the awards banquet that he was a little intimidated. “Have you seen the list of nominees?”
He said he was shocked upon winning the award but thanked his teammates and the mentors who supported and encouraged him throughout his career.
Vijay began his career at Freddie Mac in 1994 and joined Pacific Mutual in 1997 as a risk management analyst. He became director of corporate finance for Pacific Life Insurance Co. in 1999 and developed an amicable relationship with Aviation Capital while analyzing and financing the company in 1999. Pacific Life held a minority stake in Aviation Capital and began to make the small private company, which employed a handful of people, a wholly owned subsidiary.
Vijay said he was excited when he received an offer to join Aviation Capital as treasurer in 2000. He said his mentors were supportive, provided insights, and encouraged him to accept the offer. Vijay expressed his gratitude by working at both Aviation Capital and Pacific Life until the latter found his replacement in 2001.
The aviation finance industry at the time had only a handful of lenders offering the typical collateral-backed financing options. That philosophy limited Aviation Capital’s growth and exposed it to market funding risks, Vijay said. It also made it dependent on a specific financing market—all warning signs to Vijay’s risk-management mentality.
“My thought was to look at various lenders, nationally and internationally, in various industries throughout the world, and examine different financing structures,” he said. “I wanted to make sure that we could fully understand our risks and rid ourselves of risks we couldn’t manage.” He incorporated numerous ideas into Aviation Capital’s philosophy.
Vijay’s moves helped the company acquire Seattle-based Boullion Aviation Services in 2005 with financing from Deutsche Bank, UBS and HSH Nordbank, the largest transaction in aviation finance, according to the CFO award nomination form for Vijay that San Francisco-based Wells Fargo submitted. Boullion, which was founded by Boeing executives in the mid-1980s, had a $3 billion loan portfolio with 102 jets when Aviation Capital acquired it, the Seattle Post-Intelligencer reported.
Debt
Vijay said he helped Aviation Capital successfully tap the public debt markets in 2007 after the company earned its first investment grade rating. He helped power Aviation Capital’s growth by arranging more than $16 billion in financing, which Wells Fargo’s nomination said has led the industry. It also moved Fitch Ratings to lift Aviation Capital’s rating to BBB- and Standard & Poor’s to revise its outlook to “positive” from “stable.”
Today, institutional investors and financial institutions internationally provide aircraft finance on a secured and unsecured basis, Wells Fargo said in the nomination.
“We didn’t pursue these ideas to be different,” Vijay said while reflecting on his career. “I just did what made sense.”
He said he has worked long hours, that his wife managed their home early in his career, and that he missed several of his children’s birthdays. He has a 14-year-old son, Shardul, and a 12-year-old daughter, Maya.
Shardul’s birthday was the day prior to the CFO awards banquet.
“He hugged me on that day and said it was the best birthday,” Vijay said, “because I was there.”
