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Cheung Kong in talks to buy aircraft leasing firm
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A PROPERTY flagship led by Asia’s richest tycoon Li Ka-shing is seeking to buy into Irish aircraft leasing group AWAS — the Hong Kong businessman’s first major foray into the aviation industry.
Cheung Kong Holdings said yesterday in a filing to the Hong Kong stock exchange that the company “has submitted a preliminary non-binding proposal in respect of the possible acquisition of certain aircraft from the AWAS group.”
The potential deal is at an early stage, but media reports in Ireland — where AWAS has its Dublin head office — estimate it could be as much as US$5 billion for about 100 aircraft.
Li runs a vast empire through Cheung Kong and Hutchison Whampoa, with global assets in telecoms, property, utilities, ports and retail. He warned last week of a climate of political and economic uncertainty likely to last the rest of the year, saying there was a need for “long-term” strategies to increase shareholders’ returns.
In July, Cheung Kong said its profit for the first six months rose 59 percent to HK$21.35 billion (US$2.75 billion).
Dow Jones Newswire quoted analyst Jonas Kan of Daiwa Securities as saying that Li has been seeking investments that can yield steady returns.
“Cheung Kong’s plan to diversify into aviation-related investments could be a way to enhance the returns of its cash surplus,” he said.
AWAS, owned by private equity group Terra Firma, has a portfolio of 300-plus aircraft leased to more than 100 airlines around the world, according to its website.
The talks come amid fierce competition in the industry with a proliferation of budget carriers in the region.
China last year relaxed rules on setting up commercially run airlines, helping spur demand for new aircraft.
In 2003, Li’s eldest son Victor failed in his bid to buy a stake in Air Canada as a result of a disagreement with the carrier’s labor unions.
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