Saudi buyer linked to Standard Chartered’s Irish jet lessor

Saudi Arabia-owned Avilease has emerged as a possible suitor for Standard Chartered’s Irish-based aircraft leasing business, recent reports say.

UK bank Standard Chartered confirmed at the start of the year that it was considering selling its aviation finance business, which is based in Dublin.

Avilease, a jet lessor owned by Saudi Arabia’s Public Investment Fund (PIF), was reported this week to be in advanced talks to buy Standard Chartered’s aviation finance operation.

News agency Bloomberg said the deal could be valued at €3.5 billion. Standard Chartered did not comment while Avilease did not respond to a request for confirmation.

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Lessors combine their own cash with debt to buy aircraft and engines from manufacturers including Airbus and Boeing, which they lease to airlines, earning a return from the rent paid.

Standard Chartered’s aviation finance business owns 120 aircraft, leased to 30 airlines, according to reports. In January, the bank said it represented around 2 per cent of total group income.

Aircraft leasing is consolidating quickly. Irish group AerCap bought rival GE Capital Aviation Services (Gecas) in 2021 for more than €20 billion, creating the world’s biggest player with more than 2,000 planes, helicopters and engines.

SMBC snapped up Goshawk last year in a deal with an enterprise value of around €6 billion. Both are based in Dublin. The Republic is one of a handful of centres around the world for what is a specialised activity.

Established last year by the Saudi Kingdom’s sovereign wealth fund, Avilease already owns Airbus and Boeing aircraft. Several figures in the business will be familiar with the Irish industry.

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Ted O’Byrne, one-time chief investment officer with AerCap, is chief executive, while Alec Burger, former chief executive of Gecas, whose main operations were run from Shannon, is on the board.

Buying the Standard Chartered division would help Avilease boost its share of key leasing markets in the Middle East and other parts of the world, Bloomberg speculated.

PIF invests the wealth that Saudi Arabia has amassed from oil. Increasingly, the fund is looking for new areas meant to end the kingdom’s dependence on fossil fuel production for revenues.

Commenting last January on Standard Chartered’s move to seek a possible buyer for the aircraft business, Simon Cooper, chief executive, Europe and Americas, said a new owner “would drive the next phase of growth”.

The UK bank hired JP Morgan to act as its adviser on any likely transaction. Standard Chartered is a global bank with its headquarters in London. – Additional reporting: Bloomberg, Reuters