Asia's richest man, Li Ka-shing, aims to buy his way into the global aircraft leasing business as his flagship investment firm holds talks with lessors on building a portfolio of planes, people with direct knowledge of the matter said.
In a potential series of deals, the Hong Kong tycoon's Cheung Kong (Holdings) is in discussions to form a joint venture with Mitsubishi'sMC Aviation Partners leasing arm, one executive said. Li's firm is already bidding for a $5 billion fleet of 100 planes that lessor AWAS Aviation Capital has put up for sale.
The move by Li, who runs a global business spanning everything from property to energy, is part of a strategy to re-craft the group's investments outside Hong Kong, targeting stable returns in a fast-growing industry. As global air travel booms, carriers are opting to lease new planes rather than buying them, saving on huge capital outlays upfront.
"They (Cheung Kong) have their fingers in a lot of pies at the same time," said one executive, who declined to be identified as the information is not public. "They have huge ambitions and are looking to become a top global lessor."
Mitsubishi and MC Aviation declined to comment. Cheung Kong didn't respond to requests for comment from Reuters.
Analysts say Li will be looking to take full advantage of his group's financial muscle to make a success of the new strategy. However, as interest in the aircraft leasing sector grows, that approach may push target valuations higher.
"Obviously, buying a large fleet would sort of indicate that they are trying to get big overnight. But I'm not really sure this is the best time to get into the market," said Ilya Ivashkov, a New York-based senior director at Fitch Ratings.
"It seems like things are definitely getting a little bit overheated, especially in some pockets of the market," he said.