April 20, 2024

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[THE INVESETOR] South Korean private equity firm IMM Investment has joined hands with international merger and acquisition brokers and plane lease specialists to invest 100 billion won (US$83.81 million) to establish Crianza Aviation, according to Maeil Business News on Dec. 21. 

It hopes to compete in the airplane lease business, being the first local company to directly entere the US$127 billion won industry. 

The new venture has already completed purchase of seven aircrafts, most of them new and mid to large models including Boeing’s B777 and Airbus’ A330. Singapore Airlines and Qatar Airways have already signed over-10-year leases. 

Crianza will begin recruiting additional funds to acquire more aircrafts, aiming to increase the number to 20 by 2020. It hopes acquire popular models at low prices and lend them global airlines with high credit ratings.

The operating lease business is attracting financial institutions around the world with its large growth potential: Wells Fargo, Deutsche Bank, UBS and Nomura jointly own 13 percent stake in market leader AerCap; Morgan Stanley is the major shareholder of second largest firm BBAM with 27 percent stake; and Sumitomo Mitsui Banking Corp. has set up its own subsidiary SMBC Aviation Capital. 

Airlines are increasingly turning to operating leases to be relieved of the economic burden and ease risks. The fast-growing low-cost carriers also tend to choose renting rather than owning their fleet. 

“About 42 percent of the aircrafts are on lease, but in five years, the ratio will surge to over 50 percent,” said Ma Ji-hwang, head analyst at Hana Institute of Finance in a November report. 

“The aviation sector in the global financial market amounted to US$122 billion last year, and is expected to grow to US$127 billion this year.” 

By Hwang You-mee (glamazon@heraldcorp.com)