Avolon Holdings to buy aircraft leasing assets of US lender CIT Group for $10 bn
07 October 2016
Avolon Holdings, an aircraft leasing company and an affiliate of China's HNA Group, yesterday struck a deal to buy the aircraft leasing assets of US lender CIT Group Inc for $10 billion.
Avolon is paying $10 billion for the $9.4 billion net asset value of CIT's leasing assets, a premium of 6.7 per cent.
Avolon plans to fund the deal through a combination of cash, new equity contributed by HNA Group-controlled Bohai Leasing Co Ltd and debt financing of $8.5 billion.
Post closing, Avolon would have a fleet of 910 aircraft valued at over $43 billion, and make it the world's third-largest aircraft leasing company behind AerCap Holdings and GE Capital Aviation Services.
Reuters had earlier reported that Century Tokyo Leasing, which has joint ventures with CIT, and the aircraft leasing arm of China's Ping An Insurance Group, were among those competing for the aircraft assets of CIT. (See: Avolon Holdings close to buying aircraft leasing assets of US lender CIT Group)
CIT, the New York-based financial holding company earlier known as Commercial Investment Trust, had last October said that it plans to sell its lending operations in Canada and China and explore strategic options for its $10 billion commercial air unit that manages a fleet of more than 350 aircraft.
CIT, whose commercial air unit has more than 100 customers in approximately 50 countries, had invited Century Tokyo Leasing, sovereign wealth fund China Investment, CDB Leasing, and some global pension funds and insurers, to bid for the asset.
Avolon, based in Ireland, was acquired for $7.6 billion in 2015 by Bohai Leasing Co, the Chinese leasing and financial services company affiliated with HNA Group.
It has 439 aircrafts and 84 customers globally. Its clients include Emirates, Jet Airways, IndiGo, KLM, Ryanair, American Airlines, Qantas, Virgin Atlantic, Aeroflot, Air France, Alitalia, DHL and others.
A Fortune 500 Company, HNA has grown from a local aviation transportation operator into a multinational conglomerate encompassing aviation, airport management, financial services, real estate, retail, tourism, and logistics.
The group has assets worth over $90 billion, and has 11 listed companies. In 2015, HNA had revenues of $21 billion and employed nearly 180,000 worldwide.
It has a fleet of over 820 aircrafts serves nearly 700 domestic and international routes, flies to over 200 cities, and serves 77.4 million passengers annually.
HNA operates and manages Hainan Airlines, Tianjin Airlines, Deer Jet, Lucky Air, Capital Airlines, West Air, Fuzhou Airlines, Urumqi Air, Beibu Gulf Airlines, Yangtze River Airlines, Guilin Airlines, My CARGO, Africa World Airlines, and Aigle Azur.
The deal is expected to close in the first quarter of 2017