Transport Airlines

One of the Largest Aircraft Leasing Firms Is Preparing for an IPO

Mar 28, 2014 4:00 am

Skift Take

Airlines can soften the risk by leasing aircraft, and the lessors can be nimble with their stock when fortunes wane. Sounds like a good bet for an IPO.

— Jason Clampet

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Lucas Jackson  / Reuters

A model airplane rests on a table during an announcement of the commitment for Ryanair to purchase aircraft from Boeing, in New York. Lucas Jackson / Reuters

Aircraft lessor Avolon is preparing for an initial public offering this year, two people familiar with the matter said, in a bet that yield-hungry investors eyeing growing demand for air travel would sustain a recent boom in aircraft finance.

Avolon, which is backed by private equity firms Cinven Ltd, CVC Capital Partners Ltd and Oak Hill Capital Partners, as well as Singapore’s sovereign wealth fund, has been interviewing investment banks in the last few weeks to hire underwriters for an IPO, the sources said on Thursday.

CVC and Cinven declined to comment. Representatives of Avolon and its other investors did not immediately respond to requests for comment. The sources asked not to be identified because the matter is not public.

Avolon’s listing plans come as aviation draws interest from longer-term investors such as insurers and pension funds, who hope to boost weak returns dictated by low interest rates.

Avolon, which is based in Dublin, has raised $7.2 billion in capital since its launch in May 2010.

It provides aircraft leasing and lease management services to airlines and aircraft investors. It has a fleet of more than 190 aircraft serving 46 customers in 27 countries.

Its customers include American Airlines Group Inc, Air France-KLM SA and Ryanair Holdings Pc.

Avolon’s focus is on young and fuel-efficient single-aisle aircraft made by Boeing Co and Airbus Group NV. In 2013, it delivered a total of 34 aircraft to its customers valued at more than $2 billion.

Avalon’s shareholders have made equity commitments to the company totaling $1.4 billion since its launch, according to its website. It has also raised $5.8 billion in debt from commercial and specialist aviation banks.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Bernard Orr)

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