Hong Kong property giant eyes stake in Irish jet lessor Avolon
One of Hong Kong's biggest property development firms, CK Asset Holdings, is interested in acquiring a stake in Dublin-based aircraft lessor Avolon if a majority holding owned indirectly by Chinese conglomerate HNA is put up for sale.
But it's not clear that HNA, which has been selling assets to cut debt, has any immediate plans to sell more of the Ireland-based lessor via its Bohai subsidiary.
Last year, HNA sold a 30pc stake in Avolon to Japanese financial services group Orix for $2.2bn (€1.9bn). Orix has its own aviation leasing business, which is also based in Dublin.
But Avolon CEO Domhnal Slattery said last August that HNA is committed to being a long-term shareholder in Avolon and that no further stake sales of the leasing firm were planned.
"HNA said repeatedly that they deem Avolon to be a long-term strategic hold, and unequivocally, will not sell a controlling interest," he said at the time.
The remainder of Avolon is owned by Bohai Leasing, which is a subsidiary of HNA.
Avolon is the world's third-largest aircraft lessor, with a fleet of 971 owned, managed and on-order jets.
Gerald Ma, general manager of CK Asset corporate business development department, said yesterday that the group is interested in bulking up its aircraft leasing business, which accounts for 5pc of its total revenue, by buying HNA's majority stake in Avolon.
HNA and Avolon declined to comment.
CK Asset's effort to transform into an integrated enterprise that deals in multiple businesses come as housing prices in Hong Kong have surged by a whopping 200pc over the past decade, making it one of the world's least affordable property markets.
If HNA sells its stake in Avolon, CK Asset "will bid for it like others do", said Mr Ma.
"We have a lot of room for spending," he added, referring to CK Asset's low debt-to-equity ratio of around 3pc. "It can be higher ... we need to look harder at how to spend that money," he added.
The outlook for the aircraft leasing market is promising due to growing demand from budget airlines and the fact that 2,000 to 4,000 planes will need to retire globally by 2024, said Mr Ma.
The International Air Transport Association expects the number of air passengers to hit 8.2 billion a year by 2037.
It said that over the next two decades, the forecast anticipates a 3.5pc compound annual growth rate, which will result in a doubling of annual passenger numbers by then.
Also by 2037, aircraft maker Boeing expects that 42,730 new jets will be needed, with the total global fleet of aircraft doubling in size to 48,540 by that year.
Among CK Asset's recent offshore investments are Australian electricity and gas distributor Duet, Canadian heating and cooling systems provider Reliance Home Comfort, and German metering and energy management group Ista.
CK Asset, valued at around $33bn (€29.3bn), this week reported a better-than-expected 33.2pc rise in 2018 profit to HK$40.12bn (€4.5bn).
Additional reporting: Reuters