Infra funds likely to circle UK aircraft lessor

06 January 2020 - 12:00 am UTC

London-listed aircraft leasing business Avation is examining options including a sale of the business, a transaction likely to be of interest to infrastructure funds as they increasingly target the sector.

Avation said in a stock exchange announcement on Monday (6 January) that it has appointed Wells Fargo to advise on a review of options, adding that it is already in “preliminary discussions” with an unnamed potential buyer.

Shares in the Singapore-headquartered company were up nearly 10% after the announcement at 294 pence, valuing the company at around GBP 185m (EUR 217m). 

Infrastructure investors have increasingly been targeting the aircraft leasing sector, which benefits from some of the characteristics they value including contracts with airlines in excess of five years and high barriers to entry. 

Dutch pension fund PGGM last year acquired a 25% stake in Australian bank Macquarie’s leasing business Macquarie AirFinance, while KKR Infrastructure announced an investment in US player Altavair AirFinance.

An industry player active in aircraft leasing said that Avation is likely to be of interest to a range of potential buyers, including infrastructure funds looking to use it as a platform to create a larger aircraft leasing business. 

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