Aerfi, the aircraft financing group that emerged from the restructured GPA Group, is paying around $147 million (€141 million) for the Swedish aircraft leasing company Indigo Aviation, a move that will increase Aerfi's fleet by about 40 per cent to 104 aircraft worth $2.3 billion.

In a separate move, Aerfi is paying a special dividend worth almost $72 million to its existing shareholders, the main beneficiaries being 48 per cent shareholder Texas Pacific and the Aerfi directors and management who own 15 per cent of the company.

Former GPA chairman, Dr Tony Ryan, who has an estimated 6 per cent stake in Aerfi will receive around $4.5 million in respect of his shareholding in Aerfi.

The structure of the Indigo deal - which Aerfi describes as a merger but which is in reality a take-over - involves Aerfi buying 5.9 million Indigo shares worth $65 million in return for Aerfi shares and warrants equivalent to 11.8 per cent of the enlarged Aerfi.

In addition, Aerfi is buying a further 2.3 million Indigo shares at slightly more than $13 a share - the shares were trading at just over $11 before the announcement - and is making a tender offer for the remaining 3.1 million shares at the same price of $13. At that price, Indigo is worth $147 million.

Aerfi chief executive, Mr Patrick Blaney, said the company had considered reversing itself into Indigo and thus retaining the Nasdaq listing but had concluded that Aerfi is better off remaining private until it has the scale and track record for an IPO.

The enlarged Aerfi is worth around $700 million, still some way short of the $1 billion market capitalisation that the group believes is the minimum for a stock market listing. Mr Blaney warned that an IPO for Aerfi is not a certainty "but if we do, we want to be the right size and have the right track record and story".

He said the attraction of Indigo is its strong marketing team, which complements Aerfi's strengths in aircraft financing. Under the terms of the deal, Mr Blaney will be chief executive of the combined company with Indigo chief executive, Mr John Evans, becoming chief executive of Aerfi's main operating subsidiary in the US.

In the nine months to the end of September, Indigo reported net income of $11 million, up from $9.4 million in the same nine-month period in 1998. Revenues in the period jumped from $46 million to more than $78 million mainly as a result of a big increase in aircraft rental.

Aerfi's own results for the half-year to the end of September show that when an exceptional restructuring charge of $57 million in 1998 is excluded, net income (after-tax profits) was unchanged on $31 million. Revenues for the six month period fell marginally from $97 million to $96 million.