April 1, 2014 / 7:35 PM / 4 years ago

UPDATE 1-Terra Firma to look at exit options on aircraft lessor Awas-sources

* Goldman Sachs and Deutsche Bank hired for strategic review

* Options include stock market listing or sale

* Awas has book value of $8.6 billion, peers trade at 1 timesbook (Adds book value)

By Anjuli Davies and Arno Schuetze

LONDON/FRANKFURT, April 1 (Reuters) - British private equity firm Terra Firma has appointed Goldman Sachs and Deutsche Bank to advise it on what to do with aircraft leasing firm Awas, with possible options including a potential stock market listing or complete sale, three people familiar with the matter said.

Listed peers like Air Lease, Aircastle or Aercap trade at an average of one times their book value. Awas’s book value stood at $8.6 billion as of May 2013.

Terra Firma bought Awas from Morgan Stanley in 2006 for $2.5 billion and a year later acquired rival Pegasus for $5.2 billion, merging the groups to create the world’s third-largest plane lessor, making it a much larger force in the market, which has boomed in the last year or so as airlines look to build up fleets quickly to meet resurgent travel demand.

Any potential IPO is expected to take place as early as the second half of the year, one of the sources said.

“The strategic review will take some months. Options include IPO, outright sale, partial sale or do nothing,” a second source familiar with the matter said.

In a separate strategic review, Terra Firma had asked JP Morgan and Goldman Sachs to look into its options for its cinema chain Odeon & UCI, but in September 2013 decided against floating the company.

Terra Firma, CPPIB, Goldman Sachs and Deutsche Bank declined to comment.

Aviation assets have begun attracting the interest of longer-term investors such as insurers and pension funds hungry for better returns while interest rates remain low.

Dublin-based aircraft lessor Avolon is also preparing for an initial public offering this year two people familiar with the matter told Reuters in March.

Aircraft leasing firms dwarf airlines in terms of fleet size and are the biggest and most important customers for planemakers like Boeing and Airbus.

For Terra Firma, which is run by British financier Guy Hands, Awas is one of its largest investments. CPPIB, the Canada Pension Plan Investment Board, also owns a significant minority stake.

Recently sources familiar with the matter said Terra Firma was planning to launch a new 2 billion-euro fund concentrating on smaller buyouts.

Awas is leasing its 263 aircraft to airlines in 46 countries, making a net profit of $162 million on revenue of $1 billion in its 2012 fiscal year. (Reporting by Anjuli Davies and Arno Schuetze; Editing by Greg Mahlich and William Hardy)

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