Editorial Staff |
| Li Ka Shing – Licensed Image: CC BY |
The prospective deal is at an early stage, but media reports in Ireland – where AWAS’s has its head office at Dublin, estimate it could cost as much as $5 billion for around 100 aircraft.
Li Ka Shing adjures a vast empire through Cheung Kong Holdings and amalgamation Hutchison Whampoa, with global assets in property, telecoms, utilities, ports and retail. An acquisition would mark Li’s first major foray into aircraft leasing, adding to an empire that stretches from real estate to retailers, ports and power producers.
It would be the plane leasing industry’s third multi-billion-dollar deal in the past 2 ½ years, following Aercap Holdings NVC’s purchase of International Lease Finance Corp. and Sumitomo Mitsui Financial Group Inc.’s takeover of Royal Bank of Scotland Group Plc’s aviation unit, according to data compiled by Bloomberg.
He apprised last week of a climate of political and economic uncertainty likely to last the rest of the year, and said there was a need for “long-term” strategies to increase shareholders’ returns.
In July, Cheung Kong reported a profit for the first half yearly this year grew by 59 percent to Hongkong $21.35 billion ($2.75 billion).
Dow Jones Newswire quoted analyst Jonas Kan of Daiwa Securities that Li Ka Shing has been looking for investments that can yield good and steady returns.
Kan said: “Cheung Kong’s plan to diversify into the aviation-related investments could be a way to enhance return of its cash surplus”
AWAS, owned by private equity group Terra Firma, has a portfolio of more than 300 aircrafts leased to more than 100 airlines around the world, including Thai Airways, Qantas and China’s budget carrier Spring Airlines, according to its website. AWAS which focuses on buying used jets mainly from other leasing companies is also studying an initial public offering of the rest of its planes, said the news.
AWAS’s assets are valued at about $11 billion and expected to increase to as much as $17 billion in 2016, Chief Executive Officer Ray Sisson said in May. Terra Firma bought AWAS from Morgan Stanley in 2006 for $2.5billion and later merged it with Pegasus Aviation Finance Co., which it took over for $5.2 billion in 2007. Talks come amid fierce competition in the industry with a proliferation of budget carries in the Asia Pacific region.
China’s government is encouraging companies with aircraft –leasing business to look for opportunities overseas for expansion. The China Banking Regulatory Commission said this week leasing financial institutions should hold capital in a “freely convertible currency”.
In 2003, Li’s eldest son Victor Li failed in his bid to buy a stake Air Canada due to disagreement with the carrier’s labor unions.
Mohith Agadi
Editor
