Li Ka-shing Said to Mull Bid for Terra Firma Awas Assets

By Zijing Wu, Jonathan Browning and Kiel Porter

Photographer: Lam Yik Fei/Bloomberg

Billionaire Li Ka-shing, chairman of Cheung Kong Holdings Ltd.

Billionaire Li Ka-shing is considering bidding for a portfolio of planes being sold by Terra Firma Capital Partners Ltd.’s aircraft-leasing company, said people with knowledge of the matter.
Li, Asia’s richest man, may bid for the planes, owned by Awas Aviation Capital Ltd., using a group of companies he controls including Cheung Kong Holdings Ltd. (1), said two of the people, who asked not to be named because the deliberations are private. Dublin-based Awas plans to break up its fleet of about 280 planes and sell about 100 newer aircraft for as much as $5 billion, they said.
An acquisition would mark Li’s first major foray into aircraft leasing, adding to an empire that stretches from real estate to retailers, ports and power producers. It would be the plane leasing industry’s third multi-billion-dollar deal in the past 2 1/2 years, following Aercap Holdings NV’s purchase of International Lease Finance Corp. and Sumitomo Mitsui Financial Group Inc.’s takeover of Royal Bank of Scotland Group Plc’s aviation unit, according to data compiled by Bloomberg.

“He believes in sustainable asset growth, businesses that can give him sustainable profitability over seven to 10 years time,” said Mark D. Martin, chief executive officer of Dubai-based Martin Consulting LLC.

Photographer: Brent Lewin/Bloomberg

Guy Hands, chairman of Terra Firma Capital Partners Ltd.

Awas, which focuses on buying used jets mainly from other leasing companies, is also studying an initial public offering of the rest of its planes, said one person.
Wendy Tong Barnes, a spokeswoman for Cheung Kong, didn’t respond to calls and and e-mails seeking comment. A spokesman for Guy Hands’s Terra Firma declined to comment.

Li Dealmaking

Awas’s assets are valued at about $11 billion and are expected to increase to as much as $17 billion in 2016, Chief Executive Officer Ray Sisson said in May. Terra Firma bought Awas from Morgan Stanley in 2006 for $2.5 billion and later merged it with Pegasus Aviation Finance Co., which it took over for $5.2 billion in 2007.
Li, whose Cheung Kong Holdings yesterday reported a 59 percent increase in first-half profit, said the company will boost investments in the infrastructure sector.
An acquisition worth $5 billion, excluding debt, would be Li’s biggest since 2010, when his Cheung Kong Infrastructure Ltd. (1038) paid $9.2 billion for Electricite de France SA’s U.K. power networks, data compiled by Bloomberg show.

Envestra, Italy

So far this year, Li’s companies have announced a A$2.4 billion ($2.2 billion) purchase of Australian natural gas distributor Envestra Ltd. as well as a deal for Canadian airport parking assets. The billionaire’s Hutchison Whampoa Ltd. (13) also revived talks to merge wireless assets in Italy with Vimpelcom Ltd., people familiar with the matter said this month.
China’s government is encouraging companies with aircraft-leasing businesses to look for opportunities overseas for expansion. The China Banking Regulatory Commission said this week leasing financial institutions should hold capital in a “freely convertible currency.”
Chinese lessors have been focused on the domestic market since the regulator first allowed banks to start aircraft leasing in 2007. Hong Kong Aviation Capital Co., the lessor whose shareholders include China’s HNA Group, ordered 70 Airbus planes worth $7.7 billion earlier this month.