Cheung Kong in talks to buy aircraft from leasing firm
Given the industry oversupply, analysts wonder how much return the investment can generate
Li Ka-shing, the wealthiest man in Asia, is looking to venture into the capital-intensive business of aircraft leasing, but analysts wonder how much capital he will get back for his troubles.
Cheung Kong (Holdings) said in a notice posted yesterday to the Hong Kong stock exchange that it was in preliminary talks to acquire "certain planes" from Dublin-based Awas, an aircraft lessor focused on buying used jets mainly from other leasing companies.
It is the latest possible investment by Li outside Hong Kong. He had bought into the telecommunications sector in Ireland and an airport parking complex in Canada among others, stoking talk, which he has steadfastly denied, that he was gradually divesting out of the city.
The company gave no more details and a spokeswoman said she could not confirm media reports that Cheung Kong was looking to pay US$5 billion for about 100 newer aircraft among Awas' portfolio of more than 280.
"I don't quite understand why this would be an attractive business for Li," said Andrew Orchard, an analyst at CIMB Securities. "The industry is not doing that great. Maybe there is a little uptake in demand, but there is still quite a lot of capacity."
