Airline News
Mainland lessors: Avolon-Bohai merger approved, BOC to list in HK
October 23rd 2015
The shareholders of Ireland-based Avolon Holdings have agreed to the planned merger with China’s Bohai Leasing, expected to be completed by first-quarter 2016. Read More » Approximately 87.5% of Avolon’s shareholders voted on the deal during an extraordinary general meeting on Wednesday, giving 99.8% backing to the merger and other administrative proposals linked with the transaction.
Bohai, an HNA Group subsidiary, will pay $31 a share for Avolon in a deal with a total enterprise value of approximately $7.6 billion. Bohai upped its bid from 20% to 100% of Avolon’s shares after a second, unnamed bidder entered the competition. Under the deal, Avolon, which owned and managed a fleet of 258 aircraft, serving 56 customers in 33 countries as of September 30, will become a wholly-owned subsidiary of Bohai Leasing and it will delist from the New York Stock Exchange.
In separate news, BOC Aviation plans to float 40% of the company in an initial public offering on the Hong Kong Stock Exchange. The deal will comprise a mix of new and old shares, with each portion capped at 20%, and there will be the standard 90%/10% split between institutional and retail investors.
BOC plans to use the proceeds to acquire new aircraft and replenish its coffers. According to the offering memorandum for a recent $808 million aircraft securitization, the group is committed to acquiring 195 aircraft through to 2021. In August, it sealed an $8.8 billion deal with Boeing to purchase 80 B737s and two B777-300ERs, the biggest order in its 21-year history.
Analysts have said BOC’s IPO could fetch up to $5 billion to $6 billion.
In unrelated events, BOC on Wednesday signed an agreement to sell 24 aircraft, currently on lease to 21 airlines in 18 countries with a weighted average remaining lease term of 5.7 years, to Shenton Aircraft Investment I Ltd and affiliates. The financial terms of the sale are undisclosed, but BOC said it would continue to manage the portfolio.
Meanwhile, Shenzhen-based China Development Bank (CDB) Leasing is also eyeing listing in Hong Kong next year. CDB Leasing holds a portfolio of 131 aircraft worth approximately $5 billion, with more than 200 frames on order. CDB is expecting to raise $1 billion from the listing, IFR has reported.
China’s appetite for aircraft leasing just keeps growing and growing. On Saturday, China Construction Bank (CCB) Leasing International launched operations in Dublin. “Ireland is an ideal launch pad for European, African and American markets,” said Hongzhang Wang, CCB chairman. CCB Leasing holds 17 aircraft now, but aims to grow that to 200 within five years.
