US retail bank Standard Chartered is to sell its global aviation finance leasing business for an initial total cash consideration of $0.7bn.
The unit is being acquired by Aircraft Leasing Company (AviLease), owned by Public Investment Fund, Saudi Arabia’s sovereign wealth fund. The consideration is subject to adjustment with reference to the net asset value of the business at completion. The Consideration (and its adjustment) has been determined after arm’s length negotiations as part of a competitive process.
The announcement follows a statement from StanChart in January that it intended to explore alternatives for its aviation finance business. The sale is expected to be completed towards the end of 2023.
Headquartered in Riyadh, Saudi Arabia, AviLease was launched in 2022. It offers leasing, trading and asset management services. The company’s business strategy is to expand rapidly to become one of the world’s top 10 leasing companies.
Simon Cooper, Chief Executive Officer of Corporate, Commercial & Institutional Banking and Europe & Americas at Standard Chartered, said: “The sale of our Aviation Finance leasing allows us to continue to focus our efforts on those areas where we are most differentiated and to further progress our Return on Tangible Equity journey. I want to thank our Aviation Finance colleagues. Their solid commitment to building an outstanding franchise over more than 15 years has enabled the success of this transaction.”
StanChart Aviation: manages over 120 aircraft for over 30 airlines
Standard Chartered’s Aviation Finance business is a leading global aircraft leasing and financing operation. It owns and manages a modern fleet of over 120 aircraft on lease to over 30 leading airlines. In 2022, it posted profit after tax of $15.6m, gross assets of $3.8bn and a net asset value of $0.3bn. In 2021, the aviation unit reported a profit before tax of $51.8m and a profit after tax of $44.9m. The transaction includes the sale of 100% shareholding in each of Pembroke Group Limited (Isle of Man), Pembroke Aircraft Leasing Holdings Limited (Ireland) and Pembroke Aircraft Leasing (Tianjin) Limited (China). Upon completion of the sale, these companies will no longer be subsidiaries of Standard Chartered. AviLease is also funding the repayment of approximately $2.9bn of net intra-group financing from the Standard Chartered Group. The Intra-Group Loan is subject to adjustment with reference to the amount due at completion.
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On completion of the transaction, StanChart will record an estimated gain of approximately $0.3bn. The deal results in an increase in Common Equity Tier 1 capital ratio by around 19 basis points. The Agreements are subject to customary closing conditions.
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