Saudi’s Wealth Fund Unit Sets to Acquire $3.6bn Jet Leasing Arm
By Zekeri Idakwo
Global banking giant, Standard Chartered, has revealed on Monday it was selling its global aviation finance leasing business to Saudi Arabia-based AviLease for about $3.6 billion, as part of a drive to streamline its operations.
It was gathered that AviLease will pay an initial fee of $700 million and is also funding repayment of $2.9 billion of net intra-group financing from the Standard Chartered group, bringing the total consideration to about $3.6 billion.
Economic Confidential gathered the deal comes amidst the bank’s corporate strategy to focussing on business areas where it stands out from competitors as it strives to meet its 2024 targets.
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AviLease, which is also referred to as Aircraft Leasing Co, is a jet lessor owned by Saudi Arabia’s Sovereign Wealth Fund.
The Dublin-based Standard Chartered Aviation Finance owns and manages more than 120 aircraft and offers services including jet fuel hedging, debt financing and remarketing of unneeded planes.
According to Simon Cooper, CEO of Corporate, Commercial & Institutional Banking and Europe & Americas at Standard Chartered, “the sale of our Aviation Finance Leasing allows us to focus our efforts on those areas where we are most differentiated.”
The Aviation financing business of Standard Chartered Bank was ranked as the 21st biggest lessor based on the $3.7 billion market value of its fleet in publisher Airfinance Journal’s 2022 rankings.
AviLease is among the few companies that the Saudi Public Investment Fund (PIF) has endorsed as it grows deeper into various sectors.
The business deal according to AviLease Chairman Fahad Al-Saif, “will propel AviLease and will in turn support Saudi Arabia’s aviation ecosystem.”
The global aircraft leasing business is facing challenges from inflation and rising borrowing costs even as aviation demand rebounds.
The sector has gone through major consolidation in recent years, with private equity firms jumping in to buy smaller lessors and large players bulking up.
Reports revealed PIF is setting up startup carrier Riyadh Air to cloutly serve the kingdom’s capital, which has ambitions to become a global business hub.
