China’s CIC, AVIC end talks to acquire Avolon, say sources-Reuters

(Reuters) – China Investment Corp (CIC) and AVIC Capital Co Ltd have ended talks to acquire Avolon Holdings Ltd, making it likely that the aircraft leasing company will pursue an initial public offering, according to people familiar with the matter.

CIC, China’s sovereign wealth fund, and AVIC, a Chinese state-owned aerospace and defense company, were in talks to acquire Avolon for between $4 billion and $5 billion, Reuters reported in August. AVIC subsequently confirmed the discussions, cautioning there was uncertainty over the potential deal.

Avolon registered with financial regulators in June for an IPO in the United States. The sources said this week that the unsuccessful talks with the Chinese parties made the IPO the most realistic alternative for Avolon’s private equity owners to cash out on their investment.

The sources asked not to be identified because the discussions are private. Avolon declined to comment, while CIC and AVIC could not immediately reached for comment.

Avolon, which is backed by private equity firms Cinven Ltd, CVC Capital Partners Ltd and Oak Hill Capital Partners, as well as Singapore’s sovereign wealth fund GIC Pte, has been working with JPMorgan Chase & Co, Morgan Stanley and Citigroup Inc on the IPO.

Dublin-based Avalon provides aircraft leasing and lease management services to airlines and aircraft investors. It has a fleet of more than 200 aircraft serving 48 customers in 27 countries.

Its customers include American Airlines Group Inc, Air France KLM SA and Ryanair Holdings Pc.

It is not the first time that Chinese interest in such a company failed to lead to a deal. A Chinese consortium made an unsuccessful bid in 2012 to buy aircraft lessor International Lease Finance Corp (ILFC) from U.S. insurance giant American International Group Inc. That proposal deal fell apart and AIG ended up selling ILFC to AerCap Holdings NV.

Hong Kong tycoon Li Ka-shing’s Cheung Kong Holdings Ltd , Australia’s Macquarie Group Ltd and Japan’s Orix Corp were among the parties exploring bids for another Dublin-based lessor, Awas, that is owned by British private equity firm Terra Firma, Reuters reported last month.