LONDON, UK: Standard Chartered Group has signed agreements dated 28 August 2023 for the sale of its global aviation finance leasing business (through the sale of shares in relevant subsidiaries and minority equity interests held by the Standard Chartered Group engaged in such business) for an initial total cash consideration of US$0.7 billion to Aircraft Leasing Company (“AviLease”), owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund.
The Consideration is subject to adjustment with reference to the net asset value of the business at completion. The Consideration (and its adjustment) has been determined after arm’s length negotiations as part of a competitive process.
Today’s announcement follows Standard Chartered’s statement in January 2023 that it intended to explore alternatives for the future ownership of its global aviation finance business. The sale is expected to complete towards the end of 2023.
Headquartered in Riyadh, Saudi Arabia, AviLease was launched in 2022 and offers leasing, trading and asset management services. The company’s business strategy is to expand rapidly to become one of the world’s top 10 leasing companies.
Simon Cooper, Chief Executive Officer of Corporate, Commercial & Institutional Banking and Europe & Americas at Standard Chartered, said: “The sale of our Aviation Finance leasing allows us to continue to focus our efforts on those areas where we are most differentiated and to further progress our Return on Tangible Equity journey. I want to thank our Aviation Finance colleagues, whose solid commitment to building an outstanding franchise over more than 15 years has enabled the success of this transaction.”
Standard Chartered’s Aviation Finance business is a leading global aircraft leasing and financing operation. It owns and manages a modern fleet portfolio of over 120 aircraft on lease to over 30 of the world’s leading airlines.
In 2022, the aviation leasing business recorded a profit before tax of US$18.2 million, a profit after tax of US$15.6 million, gross assets of US$3.8 billion and a net asset value of US$0.3 billion and in 2021 a profit before tax of US$51.8 million and a profit after tax of US$44.9 million.
The transaction includes the sale of 100% shareholding in each of Pembroke Group Limited (Isle of Man), Pembroke Aircraft Leasing Holdings Limited (Ireland) and Pembroke Aircraft Leasing (Tianjin) Limited (China). Upon completion of the sale these companies will no longer be subsidiaries of Standard Chartered.
AviLease is also funding the repayment of approximately US$2.9 billion of net intra-group financing from the Standard Chartered Group (the “Intra-group Loan”). The Intra-Group Loan is subject to adjustment with reference to the amount due at completion.
On completion of the transaction Standard Chartered will record an estimated gain of approximately US$0.3 billion and an increase in Common Equity Tier 1 capital ratio by around 19 basis points. Standard Chartered expects to include the net proceeds from the transaction within the overall management of the capital and liquidity position of Standard Chartered and its subsidiaries.
The Agreements are subject to customary closing conditions, which remain to be satisfied as at the date of this announcement. Standard Chartered continues to be supported by J.P. Morgan Securities PLC as its financial advisor.