Terra Firma Aims to Sell AWAS Aircraft Leasing Early Next Year

The private-equity firm headed by British tycoon Guy Hands for the second time in less than two years is preparing to sell its aircraft leasing company, according to people familiar with the matter, as Chinese buyers help fuel demand for such businesses.

Terra Firma Capital Partners Ltd., which manages about $12.07 billion, aims to sell AWAS Aviation Capital Ltd. in January or February next year and has hired an investment bank to advise on the process, according to the people familiar with the plan. Terra Firma is the majority owner of AWAS, while Canada Pension Plan Investment Board, Canada's biggest pension fund, holds a minority stake. CPPIB supports the sale plan, the people said.

The planned sale comes after Terra Firma in March 2015 signaled expectations to unload the aircraft leasing company, following AWAS's deal to sell 90 commercial airliners for $4 billion to Australia's Macquarie Group Ltd. However, that effort didn't lead to a transaction, fueling on-again, off-again speculation of Terra Firma's exit strategy for the business.

Now Terra Firma appears to be betting it will have more success this time finding a buyer following CIT Group Inc.'s deal earlier this month to sell its commercial air-leasing business to Chinese conglomerate HNA Group's Avolon unit for $4 billion. Ahead of the deal, CIT, a U.S. lender, attracted other bidders such as China's Ping An Insurance (Group) Co., and Japan's Century Tokyo Leasing Corp, The Wall Street Journal reported in August. The appetite for aircraft leasing companies among Chinese buyers comes as increasing air travel from China boosts aircraft demand.

Based in Dublin, AWAS oversees a portfolio of 240 Airbus Group SE and Boeing Co. commercial aircraft. It has 90 airline customers including Japan's All Nippon Airways and Russia's Aeroflot, according to the firm's website.

Among AWAS's bigger peers such as General Electric Co.'s GE Capital Aviation Services leasing business, it is considered a niche player. That position could prove attractive for potential buyers seeking to broaden their existing portfolio. But, it may deter potential buyers aiming to quickly gain scale through a deal. Through the CIT transaction, HNA acquired 350 jets.

Write to Ben Dummett at [e-mail] and Art Patnaude at [e-mail]

(END) Dow Jones Newswires

October 19, 2016 14:05 ET (18:05 GMT)

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