Standard Chartered Group has announced the sale of its global aviation finance leasing business to AviLease, a Saudi Arabian company owned by the Public Investment Fund, for an initial cash consideration of $700m. The deal is part of Standard Chartered’s broader strategy to focus on its core businesses and follows an announcement made in January 2023 regarding the exploration of future ownership alternatives for its aviation finance segment.

The Strategic Move Aims to Refine Focus and Boost Return on Equity

Headquartered in Riyadh, AviLease was established in 2022 and aims to be one of the world’s top 10 leasing companies. It offers a range of services including leasing, trading, and asset management. “The sale allows us to focus our efforts on areas where we are most differentiated,” said Simon Cooper, CEO of Corporate, Commercial & Institutional Banking and Europe & Americas at Standard Chartered. The transaction is expected to close by the end of 2023.

Financial Impact and Key Details of the Transaction

Standard Chartered’s aviation finance unit is a leading player in the global aircraft leasing market, boasting a modern fleet of over 120 aircraft leased to over 30 world-leading airlines. In 2022, the unit recorded a pre-tax profit of $18.2 million and a post-tax profit of $15.6 million, with gross assets totaling $3.8 billion.

The deal involves the sale of 100% shareholding in various subsidiaries including Pembroke Group Limited (Isle of Man), Pembroke Aircraft Leasing Holdings Limited (Ireland), and Pembroke Aircraft Leasing (Tianjin) Limited (China). Upon completion, these entities will no longer be subsidiaries of Standard Chartered.

The sale will also lead to the repayment of approximately $2.9 billion of net intra-group financing from the Standard Chartered Group. The transaction is subject to customary closing conditions, and upon completion, Standard Chartered expects an estimated gain of approximately $300 million and a 19 basis-point increase in its Common Equity Tier 1 capital ratio.

Advisory and Next Steps

The agreements remain subject to standard closing conditions. J.P. Morgan Securities PLC continues to act as the financial advisor for Standard Chartered on this significant transaction.

This sale underscores Standard Chartered’s commitment to optimizing its portfolio and reinforces AviLease’s aggressive growth strategy in the global aviation leasing market.

  AviLease, Public Investment Fund, Riyadh, Saudi Arabia, Simon Cooper, Standard Chartered Group