Chinese firm buys 20% stake in Avolon

Chinese aviation and shipping conglomerate HNA Group has acquired a 20% stake in Irish aircraft leasing firm, Avolon, for $429m (€389m). It made the purchase via its Bohai Leasing subsidiary.

The deal is being viewed as a way of strengthening New York-listed Avolon’s relationships in the rapidly growing Chinese aviation market and comes nearly a year after talks with sovereign wealth fund, China Investment Corp failed to result in a takeover.

“The acquisition of a 20% stake in Avolon by Bohai, at a premium to our current share price, reflects their confidence in the outlook for the sector, the attractiveness of the Avolon investment case and the strength of our global franchise,” said CEO Domhnal Slattery.

“Our objective is to accelerate our growth and build on our position as a leading global aircraft lessor.

“Bohai’s strategic investment enhances Avolon’s profile, positioning and relationships in the Chinese aviation market — a market which we believe offers one of the most compelling growth opportunities in global aviation over the next two decades.”

Bohai’s chief executive, Chris Jin, said that his company’s vision is to build each of its transportation finance businesses into global leading positions.

“This investment in Avolon will bring Bohai an increased presence in the global aircraft leasing sector and Bohai will have a strong interest in benefitting from Avolon’s profitable growth,” he said.

Davy Stockbrokers said that the deal makes strategic sense to both parties and should boost Avolon’s share price.