Chinese shareholders in sight for aircraft leasing firm Transportation Partners' 500-plane orderbook
Indonesia's Transportation Partners may induct shareholders into 500-plane orderbook
Transportation Partners, an Indonesian family-owned aircraft leasing firm that has the world's largest number of next-generation Boeing and Airbus narrowbody aircraft on order, may induct Chinese stakeholders, said its chief operating officer John Duffy yesterday.
Transportation Partners has been in talks with a number of Chinese institutional investors that have approached the company with "quite attractive" proposals to co-invest in some 500 yet-to-be-delivered planes, Duffy told the South China Morning Post on the sidelines of the Airline Economics conference.
Top industry executives at the conference said the entire leasing market has been given a "Bohai boost" in investor interest by Bohai Leasing's landmark acquisition of Irish lessor Avolon for US$7.6 billion - 1.7 times its book value - in September.
Transportation Partners, a lessor owned by the Rusdi Kirana family that owns the Lion Air Group, is expecting 201 Boeing B737 Max passenger aircraft and 174 Airbus A320Neo jets estimated to be worth US$40 billion in total, making it the customer with the largest undelivered order book of the world's most advanced narrowbody planes.
There is no plan to introduce equity shareholders "in the imminent short-term" but it is a "medium-term" possibility, Duffy said, adding the company's family owners would not consider giving up control.
He declined to name companies the firm is talking to but said investment interest is high from Chinese insurance companies and pension funds.
"With this anti-corruption campaign going on, you have billions of dollars in that country [China], and so much of it wants out," he said.
"They want to invest overseas, they want to invest in dollar assets, and they want to invest in technology. We check all the boxes," he said.
While he said leasing companies are benefiting from attractive valuations brought about by the "Bohai boost", it has been a "double-edged sword" for chief executives to meet higher expectations from shareholders to deliver similarly high value.
"This may sound brutal, but the valuation you get from Chinese buyers may not be what you are really worth," he said.
As the attractiveness of investing in US dollar assets increases with the devaluation of Asian currencies, part of the investment interest could have just been "a foreign exchange play".
CIT, an American financial holding company that announced on October 21 that it is putting its US$10 billion aircraft leasing business up for sale, is also expected to attract considerable Chinese interest, while Bohai Leasing and ICBC Leasing have both been named as potential buyers for Awas, another major leasing firm that Cheung Kong was bidding for last year.
Transportation Partners has a fleet of about 250 planes in service.
Its planes are leased to the five airlines under the Lion Air Group as well as to outside customers, including China's start-up budget airline 9 Air.