StanChart to sell jet lessor to Saudi PIF unit for $3.6 billion

Standard Chartered Plc agreed to sell its aviation finance business to a unit of Saudi Arabia’s sovereign wealth fund for $3.6 billion and inked a separate deal to offload a portfolio of loans as part of efforts to boost returns.

AviLease, a jet lessor owned by Saudi Arabia’s Public Investment Fund, will acquire a portfolio of 100 narrowbody aircraft and become servicer for another 22 jets, according to a statement. The combined platform will own and manage 167 planes. 

Separately, Apollo Global Management Inc.-backed PK Airfinance agreed to buy the majority of a $920 million portfolio of secured aviation loans from Standard Chartered. Affiliates of Apollo will buy the rest of the aviation loans.

Both deals are expected to close before the end of the year.

Standard Chartered had earmarked its aviation business for sale earlier this year and hired advisers for the process.

Dublin-based Standard Chartered Aviation Finance owns and manages more than 120 aircraft and offers services including jet fuel hedging and re-marketing of aircraft. It also includes a debt-financing business to finance the purchase of airplanes. 

AviLease, founded last year, is among a number of companies the Saudi sovereign wealth fund has bankrolled as it pushes deeper into sectors from sports to tourism through a series of high-profile acquisitions.

“This acquisition will propel AviLease and will in turn support Saudi Arabia’s aviation ecosystem,” AviLease Chairman Fahad Al Saif said in the statement.

The deal is part of a push by the country to become a global trade, logistics and tourism hub, and help diversify its economy away from a reliance on oil sales. The kingdom has launched a new national airline and plans to develop one of the world’s biggest airports in its capital, Riyadh.