Irish aircraft leasing group Avolon plans €1.44bn IPO

Aircraft leasing group Avolon is planning a €1.44 billion launch on the New York Stock Exchange in a move that will value the stake of founder and chief executive Dómhnal Slattery in the business at about €20 million.

Dublin-based Avolon intends to list on the New York market before Christmas and sell about 20 per cent of its shares, priced at between $21 (€16.83) and $23 each.

A flotation in that price range will give it a market capitalisation – the total value of all its shares – of between €1.36 billion and €1.44 billion and will put a price tag of between €18.6 million and €20.3 million on Mr Slattery’s 1.4 per cent stake.

Mr Slattery will not be selling any of his 1.105 million shares in Avolon. Earlier this year, the group bought back part of his holding for $5.6 million and also paid him a $2.6 million bonus while he repaid a $10.6 million loan from the business.

According to a formal statement from the group, a number of its existing investors intend selling a total of 13.6 million of their shares, which, at the expected prices, “would result in a total offering size of between $286 million and $314 million”.

Investors cashing in

“The selling shareholders have granted the underwriters an option to purchase up to 2,045,455 additional common share to cover over-allotments, if any,” the statement added.

It also noted that Avolon itself will not receive any of the proceeds from the sale of the shares, indicating that the flotation is designed to allow a number of its investors to cash in part of their stake.

Its biggest investor, US private equity player Oak Hill, intends to sell 3.85 million of the 22.15 million shares that it owns through two individual vehicles, earning it a total of between $81 million and $88.5 million. The disposal will cut its overall stake to 18.3 per cent from 22.15 per cent.

Two of Avolon's bigger backers, institutional investors Cinven and CVC Capital Partners, each plan to sell three million of their shares, cutting their individual holdings to 14.3 million from 17.3 million, or to 17.67 per cent from 21.42 per cent, raising between $63 million and $69 million for both.

Management plans

Vigorous, part of Singapore’s sovereign wealth fund, will sell 2.68 million shares for between $56.28 million and $61.64 million, cutting its stake to 15.64 per cent from almost 19 per cent. The British Rail workers’ pension fund will earn up to $5.8 million from disposing of 252,741 of its shares.

None of Mr Slattery's management colleagues plan to sell any of their shares. The flotation will value the 477,000-plus shares owned by John Higgins at close to $11 million. Shares owned by chief financial officer Andy Cronin and chief operating officer Tom Ashe will be worth about $5 million at the mooted launch price.

The company's filings with US markets regulator the Securities and Exchange Commission state that it intends to put aside 983,000 share options for an employee incentive scheme.

Avolon has almost 81 million shares in issue. The flotation combined with its $4.25 billion debt gives it an enterprise value of about the $6 billion mark.

Mr Slattery established the company in 2010. It has 134 aircraft leased out and a further 93 on order. Its order book is valued at $6.5 billion. Its customers include American Airlines, Latin American group Latam, Garuda, Aeroflot and Air France-KLM.