Bloomberg News

Four Final Bidders for RBS Aviation Face December Deadline

November 15, 2011

(Updates with mention of earlier story by the Australian Financial Review in last paragraph.)

Nov. 11 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s largest publicly owned lender, has four bidders for its aircraft leasing division, including China Development Bank Corp., as the auction moves into its final round early next month, people familiar with the process said.

Sumitomo Mitsui Financial Group Inc., Wells Fargo & Co. and a consortium led by Macquarie Group are also bidding, said the people, who declined to be identified because the talks are private. RBS, based in Edinburgh, is seeking to sell the unit for between $7 billion and $8 billion, one person said.

The bank has sold or wound down more than 113 billion pounds ($180 billion) of assets since 2009 after receiving a government bailout the year before. If RBS succeeds in selling the aviation unit for $8 billion, the disposal would be the lender’s largest since the 2008 financial crisis, when it needed 45.5 billion pounds of government funding.

China Development Bank was invited to the final round after making a bid for the whole aviation unit rather than selected assets, while the Macquarie-led offer has become relatively less attractive, a person said, citing price and bidders’ ability to execute the deal. A bid from the commercial lender CIT Group and a joint offer from Onex Corp. and BBAM LLC have not advanced, this person said. Bids for the final round are due December 2, another person said. Goldman Sachs Group Inc. is advising RBS.

Spokesmen for China Development Bank, Macquarie, Sumitomo Mitsui, Wells Fargo, RBS and Goldman Sachs declined to comment.

RBS Aviation Capital is one of the biggest plane lessors after General Electric Co.’s Capital Aviation Services and AIG’s International Lease Finance Corp. It owns, manages or has orders for 335 commercial jet aircraft and leases to 62 airlines in 23 countries, according to its website.

The sale comes as aircraft-operating lessors play an increasingly important role helping airlines fill their fleets. Two decades ago they accounted for only about 10 percent of all aircraft purchases. Today, such lessors account for about 35 percent of direct purchases from Boeing Co. and Airbus SAS.

Lessors buy planes and then lease them to airlines for monthly fees, seeking to profit from the residual value by selling aircraft after about 15 years.

The Australian Financial Review published an earlier story about the final bidders for RBS Aviation.

--With assistance from Gavin Finch and Howard Mustoe in London. Editors: Christian Nicholson, Edward Evans

To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net; Joe Brennan in Dublin at jbrennan29@bloomberg.net; Matthew Campbell in Paris at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net


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