Government-controlled Dubai Aerospace Enterprise Ltd (DAE) is acquiring Dublin-based AWAS, the world's tenth biggest aircraft lessor, in a deal that will add over 200 planes to its fleet and more than double the size of its current business.
AWAS is the latest asset to be sold in the rapidly consolidating global aircraft leasing industry whose top 50 lessors had a fleet value of $256 billion last year, according to consultancy Flightglobal. The sector is seeing increased investment from players in emerging markets such as China, which were also in the running for AWAS, sources said.
Reuters had reported in December citing sources that AWAS had been put up for sale in an auction that could value the lessor at $7 billion, including debt.
DAE, controlled by the government of Dubai, signed a definitive agreement to buy AWAS from British financier Guy Hands' private equity firm Terra Firma Capital Partners and Canadian Pension Plan Investment Board (CPPIB), the companies said on Monday. They did not disclose financial terms of the deal.
DAE, which calls itself the largest aircraft lessor in the Middle East with a portfolio of 112 planes, said the combined company will have an owned, managed and committed fleet of 394 planes with a total value of over $14 billion. It will have more than 110 airline customers spread across 55 countries.
"This acquisition of AWAS is strategically compelling and propels DAE into a top 10 aircraft leasing platform," DAE Managing Director Khalifa H. AlDaboos said in a statement.
"Our leasing business has been growing at a rapid clip and this acquisition will more than double the current size of our business..." he said.
Paid for in U.S. dollars, aircraft are comparatively easy to re-lease to various airline operators across the world.
AWAS has a fleet of 263 owned, managed and committed narrow and wide-body aircraft, including a pipeline of 23 new aircraft on order to be delivered before the end of 2018.
DAE said its transaction will be financed by the group's internal resources and committed debt financing. The deal is subject to regulatory approvals and is expected to be completed in the third quarter of this year.
The latest sale marks the exit of Terra Firma and CPPIB from AWAS, in which they first put in money in 2006. In 2015, Macquarie Group (MQG.AX) bought about 90 planes from AWAS for $4 billion.
DAE was advised by Freshfields Bruckhaus Deringer LLP and Morgan Stanley & Co. LLC. DAE was also advised by KPMG and Latham and Watkins LLP. Goldman Sachs is acting as financial adviser and Milbank as legal adviser to the seller.
(Reporting by Anshuman Daga in SINGAPORE; Additional reporting by Alexander Cornwell and Saeed Azhar in DUBAI; Editing by Muralikumar Anantharaman)