Bank of China (03988.HK, 601988.CN) has hired Goldman Sachs and BOC International as joint sponsors for a US$3 billion listing of its aircraft leasing arm in Hong Kong, Reuters reported, citing people with knowledge of the matter.
Bank of China plans to launch the initial public offering of Singapore-based BOC Aviation in the second quarter of this year in what is set to be the world’s biggest listing by an aircraft lessor.
The IPO comes as Asian lessors raise funds to challenge Western rivals in the nearly US$217 billion global industry, with huge orders or acquisitions to service the world’s fastest-growing aviation market.
Rival CDB Leasing, owned by state-controlled China Development Bank, plans to raise US$1 billion in another IPO set for the second quarter of the year, sources told the news agency.
“There won’t be any shortage of investors because they are looking at not just an aircraft leasing company (BOC Aviation) but at a company whose future is entrenched in Asia Pacific. It’s a growth story,” said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics.
Morgan Stanley has been hired as joint global co-ordinator for the lessor’s IPO, the sources said, adding that the final deal value could change depending on market conditions and more banks could join the deal.
BOC Aviation, formed after Bank of China’s 2006 purchase of a firm formerly backed by Singapore Airlines Ltd., has grown to become Asia’s second-biggest lessor with a portfolio of about 250 planes valued at US$9.4 billion, according to estimates from industry publication Flightglobal.
“Investors should avoid airlines but aircraft leasing companies are among the best assets investors can go for because you are looking at returns of at least 12 to 13 percent a year,” said Endau Analytics’ Yusof.
BOC Aviation posted a 5 percent rise in net profit to a record US$171 million in the first half to June 2015.
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