Standard Chartered has reached an agreement to sell its aviation finance division to AviLease for USD 3.6 billion. In addition, the bank has entered into another agreement to transfer a US$920 million loan book to PK Airfinance, which is backed by PE firm Apollo. These strategic moves are aimed at boosting earnings, with both transactions expected to close by the end of the year.

AviLease, a company specialising in aviation financing and leasing, is owned by the Saudi Arabian Public Investment Fund (PIF), which manages assets in excess of USD 700 billion. The company focuses on investing in the latest generation of state-of-the-art aircraft. The deal includes a portfolio of 100 aircraft and AviLease will also take over service management for an additional 22 aircraft.

The global aircraft leasing segment is facing challenges from inflation and rising credit costs, even as demand for air travel recovers. Recently, there has been significant consolidation in the industry, with private equity firms entering the scene to acquire smaller lessors, while established giants strengthen their positions through strategic acquisitions. A case in point is the acquisition of rival GE Capital Aviation Services by Irish conglomerate AerCap in 2021, a deal in excess of USD 30 billion. This strategic move has propelled AerCap into the position of the largest global player, boasting a fleet of more than 2,000 aircraft and helicopters.

The PIF invests in a range of sectors, including tourism and sports, to diversify and enhance the Kingdom's economic sustainability through strategic investments and initiatives. It seeks to prepare the country, which is the largest exporter of oil, for a post-oil future. In the aviation sector, the Fund's involvement is evident through Riyadh Air, which is currently in discussions with manufacturers for a potential fleet of aircraft.