Hong Kong listings by aircraft leasing firms in China could raise US$5 billion
Subsidiaries of Bank of China and China Development Bank plan to use the offerings to generate capital for new planes now on order
Hong Kong has drawn two major aircraft-leasing companies in China for initial public offerings that together could raise US$5 billion, as the sector moves to tap capital markets.
Rob Morris, head of consultancy at Flightglobal Ascend, said the proposed offer of Bank of China's Singapore unit, BOC Aviation, could be worth US$4 billion. This is based on the leasing firm's portfolio value, which the consultancy put at US$10.2 billion, making it the sixth largest lessor in the world.
"The portfolio value could represent a reasonable surrogate [for its valuation], and thus 40 per cent of the value could be as much as US$4 billion," he said.
BOC Aviation, with more than 250 planes and commitments to acquire 203 more, will put up no more than 40 per cent of the company for the listing in Hong Kong. It would involve the issue of old and new shares "at an optimal market window to be determined", said its parent, Bank of China, in a notice to the stock exchange on Sunday evening that gave no information on the amount it planned to raise.
"The IPO is clearly a mechanism to raise further capital to support the backlog scheduled for delivery over the next few years," Morris said.
The announcement comes as Shenzhen-based CDB Leasing is also eyeing a listing in Hong Kong early next year. The China Development Bank subsidiary has a fleet of 131 planes worth US$5 billion, making it the world's 13th-largest, according to Ascend. It also has more than 200 aircraft on order. It is expecting to raise US$1 billion from the listing, according to financial publication IFR.