UK-based banking group Standard Chartered PLC (GB:STAN) yesterday announced the divestment of assets from its aviation leasing and financing segment to streamline its business operations. As part of the deal, the bank sold its aircraft leasing unit to AviLease, a company owned by Saudi Arabia’s PIF sovereign wealth fund, for $3.6 billion. This included assets valued at $700 million and loans amounting to $2.9 billion.
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Additionally, the bank reached an agreement to sell the majority of its secured aviation loans valued at $920 million to PK Airfinance, backed by Apollo Global Management, Inc. (NYSE:APO). Other affiliates of Apollo have agreed to acquire the remaining portion of the loan portfolio.
Specifics of the Deal
Upon finalization of the deal, Standard Chartered is set to register an approximate gain of $300 million, along with an enhancement in its common equity tier 1 capital ratio of approximately 19 basis points. The bank intends to allocate the net proceeds from the transaction to oversee its capital and liquidity positions, as well as to reinvest in other segments.
The divestment of this leasing business will enable the bank to concentrate its efforts on other areas.
Standard Chartered’s Aviation Finance division stands as a prominent worldwide entity engaged in aircraft leasing and financing. It possesses and oversees a fleet portfolio comprising more than 120 aircraft, all of which are leased to over 30 of the foremost airlines across the globe.
Earlier this year, in January, Standard Chartered designated its aviation finance business for sale and enlisted the support of multiple advisors to facilitate the process. Amidst considerable interest from various parties, AviLease emerged as the preferred choice.
The Standard Chartered share price has been trading up by 1.12% today at the time of writing.
Is Standard Chartered a Good Investment?
In July, the bank reported strong performance in its half-yearly earnings for 2023 and also revised its yearly profit projection upward. The numbers were driven by the bank’s margins, which were lifted by interest rate hikes and a record-breaking financial markets business. Analysts praised the numbers, which surpassed their expectations.
In terms of share price appreciation, STAN stock has received a Moderate Buy rating from analysts on TipRanks. The projected target for the Standard Chartered share price stands at 988.49p, indicating a potential increase of 37.3% from its present level.
