On Monday, Standard Chartered, a British multinational bank, announced the sale of its global aviation finance leasing division to AviLease in Saudi Arabia for $700 million, as part of a drive to streamline its operations. The deal comes at a time when the bank is focusing on business areas where it stands out from competitors as it strives to deliver 2024 targets, reported by Reuters.
AviLease, also known as Aircraft Leasing Co, is a prominent jet leasing company headquartered in Riyadh, Saudi Arabia. It is owned by Saudi Arabia’s sovereign wealth fund and plays a significant role in the aviation finance industry. With its strategic operations, AviLease is positioned as a key player in the global aircraft leasing landscape.
StanChart said in January it was considering options for its worldwide aviation finance business. Based in Dublin, Standard Chartered Aviation Finance oversees 120+ aircraft, providing services like jet fuel hedging, debt financing, and reselling surplus planes.
“The sale of our Aviation Finance leasing allows us to continue to focus our efforts on those areas where we are most differentiated,” Simon Cooper, CEO of Corporate, Commercial & Institutional Banking and Europe & Americas at Standard Chartered, said on Monday.
Anticipating a gain of approximately $300 million, the company foresees its common equity tier 1 capital ratio boosting by about 19 basis points due to the sale. In Airfinance Journal’s 2022 rankings, StanChart’s aviation finance unit was positioned as the 21st largest lessor, gauging its fleet’s $3.7 billion market value. AviLease is one of the select companies endorsed by the Saudi Public Investment Fund (PIF) as it extends its involvement in diverse industries.
AviLease Chairman Fahad Al-Saif said: “The acquisition 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. Notably, there’s been significant consolidation, with private equity firms acquiring smaller lessors and major players expanding. Saudi’s Public Investment Fund (PIF) is establishing Riyadh Air, a startup airline aiming to primarily serve the capital, as it envisions transforming it into a global business hub.