Standard Chartered Group has signed agreements for the sale of its global aviation finance leasing business to AviLease for $700m.

The sale, which has been agreed through the sale of shares in relevant subsidiaries and minority equity interests, has been agreed with AviLease, which is owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund. The company was launched in 2022 and offers leasing, trading and asset management services. It is expected to expand rapidly to become one of the world’s top 10 leasing companies.

The announcement follows Standard Chartered’s statement in January 2023 that it intended to explore alternatives for the future ownership of its global aviation finance business, with the sale expected to be completed towards the end of the year.

Standard Chartered’s aviation finance business owns and manages a modern fleet portfolio of over 120 aircraft on lease to over 30 of the world’s leading airlines. The company recorded a post-tax profit of $15.6m, with gross assets of $3.8bn.

The transaction includes the sale of 100% shareholding in each of Pembroke Group Limited (Isle of Man), Pembroke Aircraft Leasing Holdings Limited (Ireland) and Pembroke Aircraft Leasing (Tianjin) Limited (China).

AviLease is also funding the repayment of approximately $2.9bn of net intra-group financing from the Standard Chartered Group. On completion of the transaction, Standard Chartered will recorded an estimated gain of around $300m and an increase in common equity tier one capital ratio by around 19bps.

Chief executive officer of corporate, commercial and institutional banking and Europe and Americas at Standard Chartered, Simon Cooper, said: “The sale of our aviation finance leasing allows us to continue to focus our efforts on those areas where we are most differentiated and to further progress our return on tangible equity journey. I want to thank our aviation finance colleagues, whose solid commitment to building an outstanding franchise over more than 15 years has enabled the success of this transaction.”

The agreements are subject to customary closing conditions. Standard Chartered continues to be supported by J.P. Morgan Securities PLC as its financial adviser.

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