Is there value for private equity in aircraft finance?
Aircraft finance, a business that was booming before the credit crunch struck, is now reeling, and many financial institutions are looking to sell these businesses. Among them is stricken US financial conglomerate American International Group, which is seeking a buyer for its International Lease Finance Corporation aircraft leasing business. ILFC, which has a book value of around USD7bn, is expected to attract bids from private equity groups including Thomas H. Lee Partners, Carlyle Group, Greenbriar Equity Group and Onex in the second round of an auction early next month. Other institutions anxious to shed their aircraft finance businesses include Royal Bank of Scotland, part of an effort by the UK bank to sell off non-core activities after record losses entailed a massive injection of public funds that brought it into state ownership. Private equity firms are already well established in the aircraft finance business buyers, since Terra Firma’s aircraft leasing platform, AWAS, acquire
