Standard Chartered exits aviation leasing and financing sector

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Standard Chartered has sold $4.5bn in assets linked to aircraft leasing and financing, announcing two separate deals with Riyadh-based AviLease and with a company backed by US private equity group Apollo.

The banking group on Monday said it had sold its aircraft leasing business for $3.6bn, including operational assets worth $700mn and loans totalling $2.9bn, to AviLease, which is owned by Saudi Arabia’s PIF sovereign wealth fund.

It also agreed to offload secured aviation loans valued at $920mn to Apollo-backed PK Airfinance, a provider with a portfolio of $4bn across 80 operators globally.

After AviLease’s purchase is completed, it will own and manage more than 120 aircraft. The Saudi group will also fund the repayment of $2.9bn of financing from the aircraft leasing and financing unit to Standard Chartered.

Standard Chartered, which is streamlining its business, said it expects to receive a gain of $300mn from the sale of its leasing business to AviLease, which will raise its common equity tier one capital ratio by 19 basis points.

It said it would still offer broader product offerings, such as foreign exchange and cash management, to clients in the aviation sector.

The bank, which recorded a 27 per cent rise in pre-tax profit in the second quarter this year, said it would use the majority of the funds raised to reinvest in other parts of the group.

Simon Cooper, chief executive officer Europe and Americas at Standard Chartered, said: “The sale of our aviation finance leasing business allows us to continue to focus our efforts on those areas where we are most differentiated and to further progress our return on tangible equity journey.”

Fahad Al-Saif, chair of AviLease, said: “This acquisition will propel AviLease and will in turn support Saudi Arabia’s aviation ecosystem, on our path to help realise the Saudi Vision 2030s objective of diversifying the economy and adding high-value employment opportunities for Saudi citizens.”

AviLease secured $2.1bn in temporary funding from BNP Paribas, Citibank, HSBC Bank Middle East and MUFG Bank for the deal.

Saudi Arabia’s sovereign wealth fund has invested in a wide range of sectors including mining and sport, and has made forays into the aviation sector through Riyadh Air, which is in talks with manufacturers about a fleet of narrow-body jets.

It launched AviLease in 2022, looking to grow through purchase and leaseback deals as well as portfolio and corporate acquisitions.