A property flagship led by Asia’s richest tycoon Li Ka-shing (李嘉誠) is seeking to buy into Irish airplane leasing group AWAS — the Hong Kong businessman’s first major foray into the aviation industry.
Cheung Kong Holdings Ltd (長江實業) yesterday said in a filing with the Hong Kong Stock Exchange that the company “has submitted a preliminary non-binding proposal in respect of the possible acquisition of certain aircrafts from the AWAS group.”
The potential deal is in its early stages, but reports in Irish media outlets estimate it could amount to US$5 billion for about 100 aircraft.
Li commands a vast business empire through Cheung Kong Holdings and conglomerate Hutchison Whampoa Ltd (黃浦和記), with global assets in property, telecoms, utilities, ports and retail.
He said last week that a climate of political and economic uncertainty was likely to last until the end of the year and there was a need for “long-term” strategies to increase shareholders’ returns.
PROFITS UP 59%
Last month, Cheung Kong posted profits for the first six months of this year that grew by 59 percent to HK$21.35 billion (US$2.75 billion).
Daiwa Securities analyst Jonas Kan said that Li had been looking for investments that could yield good and steady returns.
“Cheung Kong’s plan to diversify into the aviation-related investments could be a way to enhance return of its cash surplus,” Kan said.
AWAS, owned by private equity group Terra Firma, has a portfolio of more than 300 aircraft leased to more than 100 airlines around the world, including Thai Airways, Qantas Airways Ltd and China’s budget carrier Spring Airlines (春秋航空).
FIERCE COMPETITION
The talks come during a period of fierce competition in the aviation industry with budget carriers proliferating in the Asia Pacific region.
Last year China relaxed rules on setting up commercially run airlines, helping spur demand for new aircraft.
Li’s eldest son, Victor Li (李澤鉅), failed in his bid last year to buy a stake in Air Canada due to a disagreement with the carrier’s labor unions.
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