Wednesday 7 December 2016

Avolon stake sale: China's Bohai Leasing to buy 20pc of firm for €391m

Paul O'Donoghue

Published 14/07/2015 | 07:57

Aviation entrepreneur Domhnal Slattery.
Aviation entrepreneur Domhnal Slattery.

China's Bohai Leasing announced this morning that it has agreed to buy 20pc of Dublin-based aircraft leasing firm Avolon for $429m (€391m), in the latest acquisition by a unit of aviation and shipping conglomerate HNA Group.

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The purchase would be HNA's biggest in logistics since the $1bn buy of marine container leasing firm GE SeaCo in 2011, and would provide access to a global aircraft leasing market dominated by GE Capital and AerCap Holdings NV.

"This investment in Avolon will bring Bohai an increasing presence in the global aircraft leasing sector and Bohai will have a strong interest in benefiting from Avolon's profitable growth," Chief Executive Chris Jin said in a statement.

Avalon, headed up by Domhnal Slattery, sells aircraft leasing and lease management services to airlines and aircraft investors. The Dublin-based firm has a fleet of over 260 aircraft serving 56 customers in 33 countries.

Those customers include American Airlines, Air France and Ryanair.

Bohai's cash tender of $26 for each Avolon share represents a 14.5pc premium to the stock's volume-weighted average price last week, and a 30pc premium to its initial public offering price of $20 in December, according to a joint statement from Bohai and Avolon.

The offer is open to all Avolon shareholders and will be launched at the end of this month after approval from Bohai's shareholders, the pair said.

The directors of both companies support the deal, the pair said.

Shares of Bohai were up 10pc in Tuesday trade - the highest daily trading limit for Chinese stocks - versus a 2pc gain in the broader market on the back of the announcement.

Chinese lessors, mostly backed by state-owned banks, have been expanding in recent years, as large carriers such as Hainan Airlines, Air China, China Eastern Airlines and China Southern Airlines opened more routes at home and overseas.

Aircraft maker Boeing Co estimated China will need over 6,000 new aircraft over the next 20 years.

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