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The deal underscores the strong appetite of funds to invest in
the global aircraft leasing sector, which is benefiting from
growing demand on the back of a rise in low-cost carriers and
passenger traffic.
For AirAsia, the deal marks another move to monetize its assets
as Asia's biggest budget airline seeks to transform itself into
an asset-light, digitally focused firm. The carrier is cashing
in on a booming leasing sector after ordering hundreds of Airbus
SE <AIR.PA> planes at bargain prices in recent years to become
one of Airbus' biggest customers.
Castlelake, a global fund focused on alternative investments,
has been stepping up its exposure to aviation assets. In June
last year, it raised $1 billion from investors including family
offices, sovereign wealth funds, endowments and pension funds.
"Castlelake is growing at a fast pace and looking to buy
aviation assets," said one of the people. "This is one of their
biggest deals in Asia with one airline."
Castlelake clinched the deal from Malaysia's AirAsia after
edging out U.S. lessors, funds and leasing units of major
Chinese banks in a tightly contested deal, said the people, who
did not wish to be identified as they were not authorized to
speak publicly about the transaction.
Castlelake and AirAsia are expected to close the deal in the
next few weeks, the people said.
Castlelake and AirAsia declined comment.
Earlier this year, AirAsia agreed to sell part of its aircraft
leasing portfolio in a staggered deal for $1.2 billion to firms
managed by BBAM Ltd, one of the world's largest aircraft
portfolio managers.
Castlelake is buying older aircraft which are under lease to
AirAsia's affiliated airlines, the people said. AirAsia's
leasing subsidiary, Asia Aviation Capital, manages AirAsia's
planes.
"This is an upcoming sector for asset managers. They see an
opportunity to buy older aircraft and sell them once the lease
expires," said another person familiar with the transaction.
Castlelake was ranked as the 32nd biggest lessor with the value
of its total fleet estimated at $2.1 billion in consultancy
FlightGlobal's ranking of top global lessors as of September
2018.
Chinese bank-owned leasing units and the likes of U.S. listed
AerCap Holdings NV <AER.N> and General Electric Co's <GE.N> GE
Capital Aviation Services dominate the leasing industry, but the
share of asset managers and funds is gradually rising.
(Reporting by Anshuman Daga; Editing by Christopher Cushing)
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