(July 10): Hong Kong billionaire Henry Cheng’s jewelry-to-property business empire will acquire Dublin-based Sky Leasing for US$2.8 billion, including debt, to bolster the group’s aviation business.
Though the Cheng family’s Goshawk Aviation Ltd announced the deal last month, it didn’t disclose the value at the time. Of the total, 70% of the purchase will be funded with debt and the rest from Goshawk parents Chow Tai Fook Enterprises Ltd and NWS Holdings Ltd, Brian Cheng, one of the patriarch’s sons and an executive director at NWS, said in an interview.
“The growth driver will be aircraft leasing in the next five years,” the younger Cheng said at his office in the city last week. “The good thing is our fleet is young and liquid. It’s like a wet market where you can easily sell. There’s always demand there.”
NWS and Chow Tai Fook are the latest to join a slew of companies in Asia to bet on aircraft leasing as a travel boom in the region fuels demand for planes from airlines, many of whom prefer renting, rather than owning to cap cost of ownership. Four firms with links to Chinese owners rank among the world’s top 12 lessors, the top one being HNA Group Co’s Avolon Holdings Ltd at No. 3.
Goshawk said on June 21 that it agreed to buy the unit of Sky Aviation Leasing International LP from the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers, and private-equity firm ATL Partners.
The transaction, subject to approvals, will add 51 aircraft to its fleet of about 130, according to Goshawk’s website. Goshawk is in the process of getting a credit rating to help access cheaper funds, after which an initial public offering would be the next step, Cheng said.
Leased airplanes account for about 42% of the world’s fleet, according to Flight Ascend Consultancy. Europe and Asia Pacific each hold about 30% of the world’s leased fleet.
Sky Leasing’s young and much sought-after narrow-body aircraft is the segment the group is focusing on, said Cheng. After the deal, the average fleet age of the combined portfolio would be three years, compared with the average remaining lease term of close to eight years.
Cheng’s father ranks as Hong Kong’s fourth-richest man, with a net worth of US$15.7 billion, according to the Bloomberg Billionaires Index. Hong Kong-listed NWS is a subsidiary of New World Development Co, the family’s main property, hotels and infrastructure company.
NWS’s Fortland Ventures is the largest single shareholder of Hong Kong-listed Beijing Capital International Airport Co, according to data compiled by Bloomberg.