SMBC, Hong Kong Aviation Said to Bid for Awas Airliners

SMBC Aviation Capital Ltd. and Hong Kong Aviation Capital Co. are among bidders for aircraft assets being sold by Terra Firma Capital Partners Ltd.’s plane lessor Awas Aviation Capital Ltd., said people familiar with the matter.

Dublin-based Awas has asked for second-round bids for about 100 newer aircraft from its fleet that it’s selling for as much as $5 billion, said one of the people, who asked not to be identified as the process is private.

SMBC Aviation, controlled by Sumitomo Mitsui Financial Group Inc., and Hong Kong Aviation, the plane lessor whose shareholders include China’s HNA Group, are vying with Hong Kong billionaire Li Ka-shing’s Cheung Kong Holdings Ltd. for the assets. Cheung Kong said Aug. 4 that it submitted a preliminary offer for Awas aircraft.

Hong Kong Aviation Capital declined to comment in an e-mailed statement. A spokesman for SMBC Aviation couldn’t immediately be reached.

Awas’s assets are valued at about $11 billion and are expected to increase to as much as $17 billion in 2016, Chief Executive Officer Ray Sisson said in May. Terra Firma bought Awas from Morgan Stanley in 2006 for $2.5 billion and later merged it with Pegasus Aviation Finance Co., which it took over for $5.2 billion in 2007.

Asian leasing companies are boosting their fleets as the region is set to overtake the U.S. as the world’s largest plane market, spurred by demand from China, India and Southeast Asia. Last month, China said it will encourage its lessors to look for opportunities overseas.

SMBC Aviation last month said it will buy $11.8 billion of planes from Airbus Group NV in the largest single-aisle aircraft order ever placed by a leasing company, while Hong Kong Aviation ordered 70 Airbus planes worth $7.7 billion the same month.

A group led by Sumitomo Mitsui’s banking arm bought Royal Bank of Scotland Group Plc’s aircraft leasing unit for $7.3 billion in 2012 and renamed it to SMBC Aviation Capital.

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