Cheung Kong Holdings, the property firm led by Asia's richest man Li Ka-shing, is seeking to buy into Dublin-based Awas Aviation Capital (AWAS), the company said in a regulatory filing to the Hong Kong bourse.
AWAS, an aircraft lessor focused on buying used jets mainly from other leasing companies, is owned by the private equity firm Terra Firma and the deal could be worth about $5 billion (€ 3.73 billion), for around 100 aircraft.
AWAS, which is one of the biggest aircraft leasing companies in the world, said in May it was examining options for a sale or initial public offering as Terra Firma, owned by Guy Hands, indicated it was considering an exit.
Mr Li's empire includes the property firm Cheung Kong Holdings and conglomerate Hutchison Whampoa, with global assets also including telecoms, utilities, ports and retail.
The move marks the Hong Kong billionaire's first major foray into the aviation industry since 2003, when his eldest son Victor Li failed in his bid to buy a stake in Air Canada due to disagreement with unions.
Mr Li has made noises of late that opportunities in Hong Kong are becoming limited and he is keen to diversify out of the city-state.
Mr Li’s companies are cash rich after raising nearly € 7 billion by selling stakes in various units.
The filing by Cheung Kong Holdings to the Hong Kong Stock Exchange said the company "has submitted a preliminary non-binding proposal in respect of the possible acquisition of certain aircrafts from the AWAS group".
“The company has been exploring new investment opportunities to generate additional stable revenue streams to drive forward its growth momentum. The proposed acquisition is one of the many opportunities that have been presented to the company,” the statement ran.
In July, Cheung Kong reported a profit for the first six months this year grew by 59 per cent to HK$21.35 billion ($2.75 billion).
Terra Firma bought Awas from Morgan Stanley in 2006 for $2.5 billion and a year later added Pegasus for $5.2 billion, merging the two.
The company has a portfolio of more than 300 aircraft leased to more than 100 airlines around the world, including Thai Airways, Qantas and China's budget carrier Spring Airlines.
AWAS’s market value may be $3 billion to $4 billion, given its peers’ forward price to earnings and multiples and the three-year growth rate, according to an analysis by Bloomberg Industries.
The Asia Pacific region is fiercely competitive as the number of budget carriers increases dramatically. China has relaxed the rules on setting up commercially run airlines, helping spur demand for new aircraft.
Asian companies have been busy in investing in aircraft leasing. Bank of China, China Development Bank and Industrial and Commercial Bank of China have all bought into the industry.
