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Investors group wants to buy 90% stake of plane lease- AIG, BX, BCS, & RBS

American International Group, Inc.(NYSE:AIG), the insurer declared to sell 90% stake of its plane leasing unit to New china Trust Co.

The investors associated with it in the deal are new china life insurance Co, P3 investment Ltd, ICBC international and china aviation Industrial fund. The deal is finalized at about $5.5 billion, which is a boom for American International Group, Inc. (NYSE:AIG)’s international lease finance Corporation.

In 2007, china investment Corp purchased $3 billion of The Blackstone Group L.P. (NYSE:BX)’s stake. That was the biggest deal in the history of china. Now this acquisition broke all the past records of Chinese acquisition.

ILFC, the largest aircraft lessor in china a U.S based company own 30% market share and 175 aircraft leased to 16 Chinese airlines.

ILFC, as per its nature of the business requires financial leverage and American International Group, Inc.(NYSE:AIG) tries to reduce the same.

Credit Swaps:

AIG rose up by 3.7%. Its stock went up by 2% to $33.9%.Sugesting for a higher investors confidence, its credit swap for protection against losses on debt declined.

To repay a bailout of $ 182.3 billion, in 2009 American International Group, Inc.(NYSE:AIG) planned to sell ILFC went for a public offering unit, but in 2008 it is close to collapse in spite of a $60 billion asset help.

ILFC was acquired by American International Group, Inc.(NYSE:AIG) in the early in 1990. According to a recent quarterly report published in September it had 918 aircraft amounting to $34.9 billion along with more than 200 firm orders of aircraft including Airbus SAS’s new A320neo and Boeing Co’s 787.

Regulatory Approvals:

Mr. Robert Benmosche, the Chief Executive Officer of American International Group, Inc.(NYSE:AIG) declared ILFC as a non-core asset and cleared that any activity involving ILFC, is subject to need the approval of U.S and China.

ILFC credit swap is down to 119 basis points to 270.8 basis points.

A basis point equals $1000 for the protection of $10 million debt annually.

Aircraft delivery financing will increase to $ 104 billion in 2013 from $95 billion this year and a further rise is expected to 132 billion in 2017, as said by Kostya Zolotusky, Boeing Capital Market’s managing director.

Leasing Rivals:

In August, state control ICBC gave an order to Airbus, having an A320 Assembly plant in China for 50 planes.

In January Sumitomo Mitsui Financial Grp, Inc. (ADR) (NYSE:SMFG) (8316) Intend to buy Royal Bank of Scotland Group plc (ADR) (NYSE:RBS)’s aviation department for $7.3 Billion, which is the largest acquisition in the leasing history.

According to the China Trustee Association, New China Trust, which is 19.5% owned by Barclays PLC (ADR) (NYSE: BCS) is announced as the 18th biggest trust company by asset.

American International Group, Inc.(NYSE:AIG) were up by 2.62% to close at $34.13, Blackstone Group L.P. (NYSE:BX) were up by 0.94% to close at $15.07, Barclays PLC (ADR) (NYSE:BCS) were up by 0.25% to close at $16.14, Sumitomo Mitsui Financial Grp, Inc.(ADR) (NYSE:SMFG) were up by 0.15% to close at $6.49, Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) were down by 0.31% to close at $9.64.

Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.



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