Aircraft leasing firm maps Hong Kong float

China Everbright chief reveals 'bold expansion plans' for subsidiary now due for listing in Hong Kong that could raise US$270m

PUBLISHED : Saturday, 23 February, 2013, 12:00am
UPDATED : Saturday, 23 February, 2013, 4:45am

China Everbright is planning a separate listing for its aircraft leasing unit in the second half of this year, on the back of a rapidly expanding aviation industry on the mainland, chief executive Chen Shuang said yesterday.

The investment holding group is also considering listing Focus Media, a display advertising company previously listed in the United States before it was privatised last year.

Chen, speaking at a lunch meeting on Friday, said Everbright planned to spin off 48 per cent-controlled China Aircraft Leasing "to cater for our bold expansion plans".

Neither he nor other senior executives would comment on how much capital they hoped to raise through an initial public offering. But with a fleet of 27 aircraft that generates net profit of about US$1 million per plane a year, and assuming the shares are sold at 10 times earnings, the float could raise more than US$270 million.

China Aircraft Leasing, based in Hong Kong and founded in 2006, is the fourth-largest aircraft leasing company on the mainland, after the leasing units of the large state-owned banks, such as Bank of China, Industrial and Commercial Bank of China and China Development Bank.

The company plans to add 10 aircraft this year, bringing its fleet to 27 planes. It plans to have 100 aircraft by 2015.

China's insurance industry is growing at an annual rate of 20 per cent, creating lots of opportunities for the offshore fund management business

The company's major clients are domestic carriers such as Air China and China Southern Airlines.

Chen, who is also the chairman of the aircraft leasing company, said China Aircraft Leasing had signed an agreement with Airbus for an order of 36 planes.

He said the mainland would need an additional 1,500 commercial aircraft during the 12th five-year plan to 2015, which aims at achieving a growth rate of 300 planes annually, or 15 per cent.

Chen also expressed interest in investing in air cargo shipping as well as logistics management, after witnessing a significant surge in conventional postal shipment amid heavy use of internet shopping.

Everbright and its fellow investors, Citic Capital, FountainVest and Carlyle, would also explore relisting Focus Media, after taking the Shanghai-based display advertising company private last year, Chen said.

Chen, one of the 22 members of the Financial Services Development Council, said the financial industry in Hong Kong should benefit from the opening up of the 7 trillion yuan (HK$8.7 trillion) domestic insurance industry after fund managers were selected to help mainland insurers manage their huge investment funds.

"[Mainland] China's insurance industry is growing at an annual rate of 20 per cent, creating lots of opportunities for the offshore fund management business," he said.