Cheung Kong stake purchase sends Avic International shares soaring

Shares of Avic International Holding (HK), a Hong Kong unit of state-backed aviation equipment maker Aviation Industry Corporation of China, jumped as much as 43.5 per cent in morning trading on Tuesday on news that tycoon Li Ka-shing’s property-to-ports conglomerate Cheung Kong (Holdings) had become its second-largest shareholder.

Avic International shares traded as high as 89 HK cents soon after the market opened, and traded 29 per cent higher at 80 cents at 9.50am, as investors reacted to Cheung Kong’s latest move into the aviation sector.

According to a disclosure filed with Hong Kong Exchanges and Clearing, Cheung Kong bought 450 million Avic International shares on December 16 t 60 HK cents each, equivalent to a 9.74 per cent stake.

Ultimate parent Aviation Industry Corporation of China has a 41.03 per cent stake.

It was not immediately clear whether Cheung Kong, which entered the aircraft leasing business this year, will cooperate with Avic International on the aircraft business.

Early last month, Cheung Kong said in a stock exchange announcement it had reached agreements to buy 21 planes for US$816 million from GECAS, the world’s largest lessor owned by the General Electric conglomerate; 10 aircraft worth US$492 million from BOC Aviation, Bank of China’s Singapore-based lessor; and up to 14 planes for US$584.2 million from Delaware-based lessor Jackson Square Aviation, which is owned by Japan’s Mitsubishi Group. It would also be a 60 per cent stakeholder in a newly established joint venture with Mitsubishi’s other leasing subsidiary, MC Aviation Partners, to hold up to 15 aircraft worth US$733.5 million, it added.