Exclusive: Chinese, Japanese suitors eye $4 billion sale of CIT plane leasing unit - sources
By Anshuman Daga and Denny Thomas
SINGAPORE/HONG KONG (Reuters) - U.S. lender CIT Group Inc (CIT.N: Quote) has kicked off the sale of its aircraft leasing assets by inviting more than a dozen entities to consider bidding, including China's HNA Group, Industrial and Commercial Bank of China's (601398.SS: Quote) ICBC Leasing, and Japan's Orix Corp (8591.T: Quote), sources familiar with the matter said.
The sale of CIT's Commercial Air unit could fetch between $3 billion to $4 billion, with Century Tokyo Leasing (8439.T: Quote), sovereign wealth fund China Investment Corp, CDB Leasing, plus some global pension funds and insurers, also invited to bid for the assets, the sources added.
The strong line-up of Chinese and Japanese suitors in the auction underscores the growing importance of cashed-up Asian lessors who are investing billions of dollars in a sector that offers stable, long-term and dollar-based revenue. It also signifies the shifting balance of the global aviation industry to Asia, which is seen as the engine of growth.
First-round bids for CIT's leasing arm, which owns, finances and manages a fleet of more than 350 planes, are due in June, said the sources, who declined to be named as the information has not been publicly disclosed. CIT Commercial Air has assets valued at around $11 billion and about 100 customers including Delta Air Lines DAL.N and China Eastern Airlines (600115.SS: Quote).
Companies are showing a greater appetite for pouring money into aviation financing due to expectations of "mid to single digit" returns, and as other markets such as real estate and stocks remain challenging, analysts said.
"In the past, lot of airlines were opting for ownership of planes but now most airlines are open minded on the leasing options," said Johnny Lau, who ran aircraft leasing units at some Chinese banks before starting his own consultancy.
"There is a lot of capital you need to employ for owning aircraft but for leasing planes in the short-term, you don't need much money to get the same type of assets to use," he said.