SMBC Aviation Capital is investing into the upward swing in the global aviation industry, with the acquisition of Hong Kong-owned Goshawk Aviation for an enterprise value of US$6.7 billion.
Upon completion, the deal will lead to the creation of the largest Japanese-owned aircraft lessor, and the second-largest global player by number of aircraft.
SMBC Aviation Capital will fund the deal through a combination of debt and equity, with the debt financing to be provided by shareholders, banks and capital markets. The company’s shareholders, including Sumitomo Mitsui Financial Group and Sumitomo Corporation, will provide the equity.
Citi acted as lead financial adviser to Goshawk, HSBC acted as joint financial adviser, and Clifford Chance acted as legal adviser.
Goldman Sachs International served as financial adviser to SMBC Aviation Capital. Cravath, Swaine & Moore and Milbank were its legal advisers.
“We are undertaking this transaction at a strategic point in the cycle, with a strong recovery building across the global airline industry, and we expect the transaction to be accretive to SMBC Aviation Capital’s return on capital," says Peter Barrett, chief executive officer of SMBC Aviation Capital.
Goshawk Aviation was set up in 2013. It is 50% owned by Hong Kong Stock Exchange-listed NWS Holdings (the diversified industries flagship of New World Development Company), and 50% by Chow Tai Fook Enterprises. CTFE is the flagship private investment holding company of the Cheng family, which is the controlling shareholder of HKSE-listed Chow Tai Fook Jewellery Group, one of the world’s leading jewellery retailers.
Like SMBC Aviation Capital, Goshawk Aviation is based in Dublin. The merged entity will have a portfolio of 709 owned and managed aircraft, as well as another US$13 billion of orders from Boeing and Airbus, which include 261 new-technology narrowbody aircraft. The merged company will operate as SMBC Aviation Capital, with a single corporate structure incorporated in the Republic of Ireland.
The deal is currently awaiting regulatory approval and includes the acquisition of a portfolio of 176 owned and managed aircraft. The transaction does not cover Goshawk’s aircraft in Russia.