The HNA Group’s interest in this business is due to growing Chinese appetite for air travel.
According to sources familiar with the situation, a firm backed by Li Ka-shing, a tycoon from Hong Kong along with China’s HNA Group is advancing to a second round of bidding for the leasing of CIT Group’s aircraft assets valued in the range of $3 to $4 billion.
Incidentally, CIT’s commercial air unit is one of the world’s top 10 lessors with 331 aircraft. With the rapid growth of air travel by the Chinese, the level of enthusiasm shown by the Chinese firms for the $228 billion global aircraft leasing market can be better understood.
Sources have disclosed that HNA has emerged as the leading contender for the U.S. lender’s assets. HNA’s leasing arm, Bohai Capital, has plans of adding 300 to 400 planes to its 500-plus order it has in service and on order.
Other firms advancing to the next round include Ping An Insurance and Century Tokyo Leasing. While Ping An Insurance has an aircraft leasing arm, Century Tokyo Leasing has existing joint ventures with the CIT Group.
The sources preferred the cover of anonymity since they were not authorized to speak to the media.
Significantly, Li’s Accipiter Holdings, based out of Dublin, Ireland is a unit of CK Hutchison Holdings. It has partnered with U.S.-based Apollo Aviation Group for its bid.
CK Hutchison, is a conglomerate which has business interests ranging from telecoms to ports. It entered the aircraft leasing business in 2014, so as to diversify its revenue streams.
“This fits well with their ambition to build a sizeable global leasing business,” said a source who prior knowledge of the group’s overall strategy.
When requested to respond to requests for comments, Century Tokyo Leasing, HNA Group and Ping An Insurance declined comment.
Apollo Aviation and CK Hutchison did not respond to requests for comments.
According to a regulatory filing with the Securities and Exchange Commission, CIT is said to be pursuing a dual track process which could result in either a spinning off of its business or an outright sale.
According to sources, CIT has more than 100 customers including Delta Air Lines. It kickstarted the sale process earlier this year and has invited bids from more than a dozen entities.
According to sources, the second round of bidding is set to start in August with a meeting with the short-listed suitors in New York in the coming weeks.
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