American private equity firm, Cerberus Capital Management is reportedly eyeing a majority stake in airport handler Swissport Group, currently owned by embattled Chinese conglomerate HNA Group, a Bloomberg report said.
Quoting people with knowledge of the matter, the report noted that HNA is working with advisers to explore possibilities for Swissport including the sale of a majority stake in the business,
which according to the people could be valued at about US$3 billion.
Apart from Cerberus, Swissport has also attracted interest from other suitors, including Singapore state investment company Temasek Holdings, which reportedly has been studying a potential investment in Swissport as it considers deals with HNA that are complementary to its portfolio, Bloomberg reported in April.
Although representatives for HNA and Cerberus declined to comment, an investment in Swissport would help Cerberus expand its handling services business globally. In June, Cerberus agreed to buy Worldwide Flight Services from Platinum Equity in a deal valued at about 1.2 billion euros (US$1.4 billion). WFS provides ground handling and technical services at about 200 locations across more than 20 countries.
Swissport, which is active at more than 315 stations in 50 countries across five continents and handles more than 4m tonnes of cargo each year, was acquired by HNA in 2015 from buyout firm PAI Partners for 2.73 billion Swiss francs (US$2.7 billion).
First sales attempt failed
Swissport reported 2017 revenue that rose to 2.8 billion euros from 2.7 billion euros, and operating earnings before interest, tax, depreciation and amortization of 220 million euros. In March, it completed the acquisition of Australia’s Aerocare, which it said will help it expand in the Asia-Pacific region.
In April, HNA Group planned an initial public offering for Swissport, but the conglomerate decided to postpone the share sale because of volatile market conditions.
The Financial Times earlier suggested that the HNA Group would struggle to carry out the listing of Swissport because the two companies' finances are too intertwined as a result of a series of short-term loans made by the ground handler to other HNA subsidiaries.
Shoring up the balance sheet
After racking up one of China’s biggest corporate debt loads in a global acquisition spree, HNA has been selling off assets to shore up its balance sheet.
This year alone, the Group HNA has sold Hilton Worldwide Holdings Inc. and the Radisson hotel chains and started disposing its stake in NH Hotel Group SA.
Earlier this month, CargoForwarder Global reported that HNA was in advanced talks to sell a 30% stake in aircraft lessor Avolon Holdings Ltd to Japan's Orix Corp. 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.
Nol van Fenema