Macquarie to buy planes from AWAS for more than US$4b

[SINGAPORE] Australian bank Macquarie Group Ltd's aircraft leasing subsidiary is in exclusive talks to buy a portfolio of new planes from Dublin-based lessor AWAS for more than US$4 billion, according to people familiar with the matter.

Macquarie AirFinance is negotiating a deal for just under 100 newly built and on-order aircraft being sold by AWAS, the people said. Macquarie is working to finalise an agreement before the end of January, they said, asking not to be named because the matter was confidential.

Asia has become the world's fastest-growing aviation market as airlines seek to tap into the rising spending power of the region's travellers. New carriers are increasingly looking to rent planes from the leasing industry, estimated to have aircraft portfolios worth US$200 billion, while lessors have been drawn to the sector's strong returns.

Macquarie declined to comment.

Reuters reported in September that other suitors for the AWAS aircraft portfolio were Japanese firms Orix Corp and SMBC Aviation Capital, owned by Sumitomo Mitsui Financial Group Inc's. Hong Kong Aviation Capital, which is owned by China's HNA Group, and Bohai Leasing Co Ltd, were also in the hunt.

A person with knowledge of the deal said that Orix pulled out from the race because it only wanted to buy some sets of assets. A spokesman for Orix declined to comment on Friday.

Asian tycoon Li Ka-shing's Cheung Kong Holdings Ltd , said in August that it was in preliminary stages in considering the acquisition. It then agreed to buy stakes worth US$2 billion in aircraft from other lessors.

AWAS, one of the world's biggest aircraft lessors, is owned by British private equity firm Terra Firma Capital Partners Ltd and has more than 300 planes on lease to over 110 airlines. AWAS and Terra Firma both declined to comment.

Last year, Terra Firma hired Goldman Sachs and Deutsche Bank to explore exit options for AWAS, and launched a process designed to sell newer aircraft for around US$5 billion.

The firm is exploring options, including an initial public offering, for the remaining portfolio of older planes that could be worth around US$8 billion, Reuters previously reported.

REUTERS