BIDDERS LINE UP FOR RBS AVIATION BUT AVOLON BARRED BY BOSSES

Dino D'Amore
By Dino D'Amore July 26, 2011 11:47

BIDDERS LINE UP FOR RBS AVIATION BUT AVOLON BARRED BY BOSSES

Bad blood remains at the Royal Bank of Scotland its seems after former CEO Domhnal Slattery left its leasing arm to set up Avolon but took several RBS executives with him. As a result Avolon has been banned from the bidding process for the £5 billion auction of RBS’ aircraft leasing unit, reports Reuters. As Avolon would be the most obvious leading contender, there are concerns that the taxpayer, which owns 83%, could be short-changed on the deal by barring such a credible bidder. Avolon has plenty of capital available for such a purchase and can call on help from its private equity backers CVC, Cinven and Oak Hill Capital.

RBS Aviation, which owns, manages or has orders for 466 aircraft, has called for potential buyers to submit first round bids by the middle of August. Goldman Sachs is running the sale of the business.

Potential bidders include Air Lease Corp – well capitalized since its IPO – GE Capital Aviation Services (GECAS) and Bank of China, which owns BOC Aviation. Guy Hand’s Terra Firma is expected to bid for the leasing arm with the aim of merging it with Awas that would create the third largest aircraft lessor after GECAS and International Lease Finance Corp.

Other sources have suggested Mitsubishi Corporation, Marubeni Trading Co. or Australia’s Macquarie, may also be interested in bidding for part of the business.

It remains to be seen whether RBS will be put under pressure from the UK government to allow Avolon to submit a bid, which given the outcry in the press is not impossible. Domhnal Slattery will be chomping at the bit to buy back the company he founded as International Aviation Management Group, which was bought by RBS in 2001 and became the basis for RBS Aviation. This will be an interesting race to watch as the players line up. Although my money would have been on Avolon to buy the unit, now all bets are off although I suspect Guy Hands would relish the prospect of making Awas the third largest lessor in the world, so don’t rule him out just yet.

Dino D'Amore
By Dino D'Amore July 26, 2011 11:47
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