Japan’s Sumitomo Mitsui Financial Group (SMFG) and Sumitomo have signed an agreement with the Royal Bank of Scotland (RBS) to acquire RBS’s aircraft leasing business, RBS Aviation Capital, for $7.3bn.
RBS Group finance director Bruce Van Saun said that reaching agreement on a deal of this scale in such a volatile market is a significant success for the company’s non-core division and a credit to Sumitomo Mitsui Banking Corporation (SMBC).
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"This transaction further evidences our progress in reducing our non-core portfolio and returning the group to a position of strength," Saun said.
RBS Aviation Capital was formed in 2001 and has a fleet of 206 jets leased to 65 airlines in 24 countries. The deal also includes the purchase of the additional 87 aircraft, worth $3.7bn, by 2015, which will be transferred with the business. The Japanese companies beat off competition from other interested buyers, including China Development Bank and US bank Wells Fargo.
The sale is expected by the end of the third quarter of 2012 and is subject to certain post-closing adjustments. Following the acquisition, SMFG will hold about 70% of RBS Aviation Capital, while Sumitomo will hold the remaining stake. The two Japanese companies formed an aircraft-leasing joint venture named SMFL Aircraft Capital in December 2008 as part of the strategic partnership between SMFG and SC.
The acquisition will enable SMFG and Sumitomo Corporation to further expand and develop the business in Asia and other emerging markets. The consortium will explore stable long-term funding sources for the current acquisition, which include funding supports by export credit agencies and government-affiliated financial institutions of various countries.
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By GlobalDataThe divestment of the aircraft leasing asset is RBS’s biggest asset disposal since the bank’s bail-out by the UK Government in 2008. The Japanese consortium said it will continue to 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.
