EDINBURGH (dpa-AFX) - Japan's Sumitomo Mitsui Financial Group, Inc. (SMFG, SMFNF.PK) agreed Monday to acquire the aircraft leasing business of British financial services provider Royal Bank of Scotland Group Plc (RBS, RBS.L) for about $7.3 billion. This ends the British lender's two-year attempt to sell the unit along with other non-core assets. Sumitomo Mitsui pipped China Development Bank Corp. to win the deal in a two horse race in the final phase of bidding. Dublin, Ireland-based RBS Aviation Capital, a major player in the global aviation finance industry, provides commercial jet aircraft leasing and financing, leasing aircraft to airlines and offers aircraft investors an extensive range of aviation investment opportunities. RBS Aviation, the world's fourth largest aircraft leasing company in terms of book value, owns, manages or has orders for 329 commercial jet aircraft and serves 75 airline customers in 24 countries, according to its website. It has sold 178 aircraft and 14 engines in the past 8 years. Sumitomo is currently in the process of expanding its aircraft leasing business SMFL Aircraft Capital Corp. B.V., which was established in December 2008 by Sumitomo Mitsui Financial or SMFG, and Sumitomo Corp. or SC. The deal will help the company to expand and develop its business in Asia and other emerging markets. 'Both groups, SMFG and SC, will continue their concerted efforts to further strengthen the aircraft leasing business and offer higher-value-added financial services to the airline industry and aircraft manufacturers in both domestic and foreign markets by leveraging their advantages, such as a sound financial position, ability to provide sophisticated financial solutions, broad global client base, and advanced risk management practice,' Sumitomo Mitsui noted. Following the closure of the deal, SMFG group will directly and indirectly own about 60 to 70 percent of Netherlands-based SMFL Aircraft Capital, which will be the main investor. Meanwhile, SC group will have the remaining about 30 to 40 percent ownership. However, the detailed shareholding structure will be determined based upon further discussion. Reports in September had revealed that Australian investment bank Macquarie Group (MQBKY.PK, MQG.AX) was planning an over $6 billion bid for the aircraft-leasing business. It had bought 53 passenger planes from American International Group's (AIG) aircraft-leasing unit for around $2 billion in 2010. Other bidders were China Development Bank Corp., Wells Fargo $ Co. (WFC), General Electric Co. (GE) and Terra Firma Capital Partners Ltd. RBS has been in the process of shedding its non-core operations to pay back the public funds it received in the form of a government bailout during the financial crisis in late 2008. The strategic plan to sell off its non-core operations was announced in February 2009. RBS, which is 84 percent owned by the UK government, had received 45.5 billion pounds of government funding during the global financial crisis. RBS initially put its aircraft leasing unit on the block in September 2009, and hired Goldman Sachs Group Inc. to sell the unit. Further, RBS is reportedly in the process of finding buyers for its vehicle leasing division, Lombard Vehicle Management Ltd., and also for its rail car leasing business. RBS closed Friday's regular trading session at $7.36, up $0.19 or 2.65% on a volume of 0.68 million shares. On the London Stock Exchange, RBS.L closed on Monday at 24.42 pence, up 0.32 pence or 1.33% on a volume of 128.1 million shares.
Copyright RTT News/dpa-AFX
© 2012 AFX News
