Fly Leasing chief executive Colm Barrington said on Monday that private equity firms' demand for assets prompted the Irish company's $2.36 billion (€2 billion) sale to Carlyle Group.
Carlyle agreed to buy Fly Leasing in a deal that will see the US investor take the Dublin-based aircraft lessor private with a value of $2.36 billion.
Speaking after the deal’s terms were announced, Mr Barrington noted that private equity investors’ appetite for aircraft leasing was better than that of the public markets.
"We think it's good value for our shareholders," the former Aer Lingus chairman added.
Mr Barrington noted that private equity investors had “lots of cash” and were looking to spend it.
New York-listed Fly hired US merchant bank Goldman Sachs last year to look at its options.
Goldman began a bidding process that initially lured 10 to 12 potential buyers, according to Mr Barrington.
The bank whittled that number down over the following months until it settled on the deal with Carlyle.
Washington-based Carlyle will pay $17.05 per share in cash for Fly Leasing, adding 84 aircraft to the private equity firm’s commercial aviation investment and servicing arm, which already owns 243 planes.
Shareholders must back the deal, which should close in the third quarter of 2021 if it gets this approval.
Critical financing role
Competition regulators must also approve the transaction, but Mr Barrington said that Fly did not expect any difficulty with that.
Fly Leasing’s sale comes on the heels of AerCap Holdings’s $30 billion deal to buy General Electric’s plane-leasing arm.
While air travel is slowly beginning to pick up again, leasing firms have suffered during the Covid-19 pandemic.
They play a critical financing role in keeping deliveries flowing, often with sale-leaseback deals that hand vital cash to airline carriers.
Carlyle Aviation Partners, which sits within Carlyle's global credit group, has total assets under management of $6.1 billion and more than 90 employees, as well as offices in the US, Ireland and Singapore.
The business has 246 aircraft owned, managed or committed to purchase with 93 airline lessees in 53 countries.
Shares in Fly Leasing gained 90 per cent over the last year through Friday. Fly Leasing was trading up 26.5 per cent at $16.76 on Wall Street shortly after 3.30pm Irish time on Monday.
Mr Barrington and Julie Ruehl, Fly's chief financial officer, work for the leasing company but are employed by BBAM LP, which manages more than 500 aircraft through four divisions for different groups of investors. Fly is the publicly listed arm.
Mr Barrington has more than 50 years’ experience in aviation. He previously worked for Aer Lingus, GPA, and Babcock & Brown, among others.
He is on the boards of Finnish carrier Finnair and Hibernia Real Estate Investment Trust. He said on Monday that he was not sure of what his next move would be. – Additional reporting: Bloomberg