Dubai Joins Jet-Lease Elite as AWAS Deal Lands $14 Billion Fleet

(Bloomberg) -- Dubai Aerospace Enterprise Ltd., the Middle East’s biggest plane-leasing company, propelled itself into the top ranks of global players with a multi-billion dollar agreement to buy Dublin-based AWAS Aviation Capital Ltd. from U.K. private equity firm Terra Firma Capital Partners.

The transaction will swell DAE’s fleet to 394 aircraft valued at more than $14 billion with the addition of 263 jets that AWAS owns, manages or has on order, the Dubai-based company said Monday. While terms weren’t disclosed, Terra Firma spent 5.68 billion euros ($6.2 billion) on AWAS, according to its website.

The deal extends a consolidation spree in leasing that last year saw China’s HNA Group agree to buy CIT Group Inc.’s aviation unit for $10 billion to expand its Avolon Holdings Ltd. arm. While DAE will rank after HNA and market leaders General Electric Co. and AerCap Holdings NV by fleet value, it joins the next tier alongside BBAM LLC, SMBC Aviation Capital of Japan, China’s BOC Aviation Ltd. and ICBC Financial Leasing Co., and Steven Udvar-Hazy’s Air Lease Corp.

DAE Managing Director Khalifa Al Daboos said the transaction is “strategically compelling” and will provide the state-owned firm with the scale needed to become a major player. It will be financed with existing cash and debt and should be completed in the third quarter, he said.

Dubai already ranks as a significant force in air transport, with local carrier Emirates having established itself as a the biggest long-haul airline by turning the sheikdom into a global travel hub, aided by the world’s largest fleet of Airbus SE A380 superjumbos. DAE also has an engineering arm based in Jordan.

China Interest

Terra Firma, founded by Guy Hands, earmarked AWAS for sale some years ago, with ICBC joining Aviation Industry Corp. of China in 2015 to pursue a takeover worth more than $5 billion, people familiar with the matter said at the time.

The private equity firm had bought AWAS from Morgan Stanley in 2006 in partnership with the Canadian Pension Plan Investment Board, which took a 25 percent stake. The business was expanded a year later with the purchase of Pegasus Aviation Finance Co. from Oaktree Capital Management LLC, creating what at the time ranked as the world’s No. 3 aircraft-leasing business.

In 2015, Terra Firma sold 90 AWAS planes to Macquarie Group Ltd. for $4 billion and 30 to investment vehicle Diamond Head Aviation as it began a retreat from the leasing business.

The expanded DAE leasing arm will serve 110 airline customers in more than 45 countries, with AWAS bringing offices in New York, Miami and Singapore, as well as Dublin. DAE was advised by Freshfields Bruckhaus Deringer, Morgan Stanley, KPMG LLP and Latham & Watkins LLP. Goldman Sachs advised Terra Firma,with Milbank as legal adviser.