Ex-Pimco Parent PacLife Weighs Plane Unit IPO Under New CEO

Updated on
  • Aviation Capital's Kalscheur to take vice chairman post
  • PacLife CEO Morris says IPO could strengthen plane business

Pacific Life Insurance Co. is considering an initial public offering for Aviation Capital Group after naming Khanh Tran chief executive officer of the plane-leasing unit.

Tran, 59, takes the post Jan. 1, replacing Denis Kalscheur, who will become ACG vice chairman until the end of 2016, Newport Beach, California-based Pacific Life said in a statement Tuesday.

“To further strengthen its platform for continued success, ACG, with the support of Pacific Life, is considering a possible IPO,” PacLife CEO Jim Morris said in the statement. “Khanh has an extensive knowledge of the aircraft-leasing industry and the financial markets and has overseen the growth and strategy of ACG since 1996.” Tran has been PacLife president since 2012, a role that involved oversight of aviation-leasing, asset-management and investment-management groups, according to the statement.

Morris has been reshaping the business mix at the insurer, which operates as part of a mutual holding company and has no publicly traded stock. He struck a deal in April to sell a unit that helps manage funds for pension clients to Goldman Sachs Group Inc.

Growth Perspective

“An IPO of Aviation has all the makings of a win-win,” David Havens, a debt analyst at Imperial Capital, said in a note to clients. The insurer would benefit from sale proceeds, he said, and “Aviation would be out of the chute with investment-grade ratings, and would likely be able to unshackle itself from a growth perspective.”

The plane unit is rated BBB- at Standard & Poor’s. As of Sept. 30, it had about $9.1 billion in total assets and about $632 million in year-to-date revenue, according to Tennyson Oyler, a spokesman for the insurer. PacLife made an equity investment in ACG in 1996, and the operation became a wholly owned subsidiary in 2005.

PacLife is known in capital markets as the former parent of bond firm Pacific Investment Management Co., which was established in 1971 by a group that included money manager Bill Gross. Pimco became a publicly traded company in 1994, and insurer Allianz SE agreed in 1999 to buy the company.

ACG has a fleet of almost 400 aircraft that it owns, manages or has on order. The planes are leased to about 100 airlines in more than 45 nations, according to the statement.

American International Group Inc., which competes against PacLife in the insurance industry, sold a plane-lease business last year to AerCap Holdings NV to simplify operations after weighing an IPO for the unit. CIT Group Inc. CEO John Thain said in November that the lender was weighing a spinoff of its aircraft-leasing operation.