China’s HNA Group, the conglomerate shedding assets to pay down debt, is in advanced talks to sell a 30% stake in aircraft lessor Avolon Holdings Ltd to Japan's Orix Corp, a Reuters report said. The Group has also reportedly agreed to sell hotel company Radisson Holdings to Chinese hospitality giant Jin Jiang International Holding.
The sale of Radisson, which according to a Bloomberg report, could fetch at least US$2 billion and is expected to be completed by the end of the year, would add to the more than US$17 billion in
divestments that the HNA Group has made this year.
According to unnamed sources, the stake in Dublin-based Avolon would be sold for about US$2.2 billion, making the investment the largest-ever for Orix.
HNA bought Avolon for US$2.5 billion in 2015 via Bohai Capital Holding, which HNA controls. In late 2016, Avolon agreed to acquire the aircraft-leasing arm of CIT Group for US$10.4 billion, creating the world's No.3 aircraft lessor after General Electric's GE Capital Aviation Services and US-listed AerCap.
US$280 billion strong aircraft leasing industry
The Reuters report said that Avolon has a fleet of 890 aircraft and counts 156 airlines among its clients. The stake purchase by Orix will help its fully-owned unit Orix Aviation, which is already among the world's leading lessors, to expand its market share at a time when a flood of Chinese money has been shaping the US$280 billion-strong leasing industry as a significant new asset class, Reuters said.
The report added that Avolon mainly leases aircraft made by Boeing and Airbus to large airline companies, while Orix leases used planes to midsize airlines and LCCs.
The HNA Group’s merry-go-round of asset sales is spinning faster
Orix also manages planes owned by domestic or foreign funds through leasing.
Orix plans to expand into the primary airplane leasing market, where Avolon is performing well. In turn, Orix will introduce Avolon to its fund customers who are buyers of airplanes.
Last month, HNA sold part of its holdings in Swiss-based airline caterer Gategroup Holding, weeks after investors including a unit of Singapore's state-owned Temasek Holdings Pte Ltd bought stakes in Hainan Airlines Holding Co Ltd.
Hainan Airlines, China's fourth-largest airline, is considered HNA's crown jewel.
Nol van Fenema