Asia's richest man targets Irish aviation group AWAS
August 5, 2014, 12:00 am TWN
HONG KONG--A property flagship led by Asia's richest tycoon Li Ka-shing is seeking to buy into Irish aircraft leasing group AWAS — the Hong Kong businessman's first major foray into the aviation industry.
Cheung Kong Holdings said Monday in a filing to 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 at an early stage, but media reports in Ireland — where AWAS's has its Dublin head office — estimate it could be as much as US$5 billion for around 100 aircraft.
Li commands a vast empire through Cheung Kong Holdings and conglomerate Hutchison Whampoa, with global assets in property, telecoms, utilities, ports and retail.
He warned last week of a climate of political and economic uncertainty likely to last the rest of the year, and said there was a need for "long-term" strategies to increase shareholders' returns.
In July, Cheung Kong reported a profit for the first six months this year grew by 59 percent to HK$21.35 billion (US$2.75 billion).
Dow Jones Newswire quoted analyst Jonas Kan of Daiwa Securities that Li has been looking for investments that can yield good and steady returns.
Kan said: "Cheung Kong's plan to diversify into the aviation-related investments could be a way to enhance return of its cash surplus."
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 and China's budget carrier Spring Airlines, according to its website.
The talks comes amid fierce competition in the industry with a proliferation of budget carriers in the Asia Pacific region.
China last year relaxed rules on setting up commercially run airlines, helping spur demand for new aircraft.
In 2003, Li's eldest son Victor Li failed in his bid to buy a stake in Air Canada due to disagreement with the carrier's labor unions.