S. Korean group is pre­ferred bid­der for Asia Avi­a­tion Cap­i­tal, say sources

New Straits Times - - Business -

ALIT­TLE-KNOWN South Korean group is in ad­vanced talks to ac­quire a stake in AirAsia Bhd’s air­craft leas­ing unit, ac­cord­ing to three peo­ple fa­mil­iar with the mat­ter.

The peo­ple said a deal would value AirAsia’s fully-owned unit, Asia Avi­a­tion Cap­i­tal, at roughly US$900 mil­lion (RM3.98 bil­lion).

Pri­vately-owned Korea Trans­porta­tion As­set Man­age­ment (Ko­tam) has been picked as the pre­ferred bid­der, the peo­ple said, with one adding that state lender Korea De­vel­op­ment Bank (KDB) was tapped to pro­vide fund­ing, though it was not clear whether the bank had agreed to back the deal.

Ko­tam is part of Kukje Mar­itime In­vest­ment Corp, known as KMarin, which was founded in 2005 and has a fleet of 46 ships, ac­cord­ing to its web­site.

A suc­cess­ful deal would mark South Korea’s big­gest move into the US$256 bil­lion global air­craft leas­ing sec­tor.

Ko­tam and AirAsia are ne­go­ti­at­ing fi­nal terms of the pur­chase of a ma­jor­ity stake in the leas­ing unit, one of the sources said. AirAsia has sought buy­ers for its sub­sidiary since last year, and had said it aimed to close a sale early this year.

A deal with Ko­tam could still fall through, and two sources said AirAsia had not closed the door to a deal with a Chi­nese bid­der.

South Korean in­sur­ers, as­set man­agers and se­cu­ri­ties firms are at­tracted to avi­a­tion fi­nance as air­craft leases of­fer fixed re­turns and are of­ten seen as rel­a­tively safe trans­ac­tions.

It was re­ported in De­cem­ber that AirAsia had re­ceived strong in­ter­est from North Asian firms, be­sides many Chi­nese com­pa­nies.

One of the sources said AirAsia was be­com­ing con­cerned about Chi­nese buy­ers’ abil­ity to close a deal due to China’s re­cent mea­sures to tighten con­trols on money mov­ing out of the coun­try.

AirAsia, which has pend­ing or­ders for about 400 Air­bus air­craft, has been al­lo­cat­ing planes to its leas­ing sub­sidiary and has been seek­ing to di­ver­sify the unit’s cus­tomer base be­yond AirAsia’s af­fil­i­ates.


An Air­bus A320 air­craft op­er­ated by AirAsia Bhd. The bud­get air­line has pend­ing or­ders for about 400 Air­bus air­craft.

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