CIT Group Aircraft Leasing Unit Draws Bids From China, Japan

CIT Group Inc. (NYSE:CIT) , which is among the world's top 10 lessors, is said to be considering a spin-off or sale of its aircraft leasing unit by the end of this year in order to simplify operations and focus more on domestic banking. The news was first reported by Reuters.

The sale has attracted over a dozen prospective suitors including China's HNA Group, Industrial and Commercial Bank of China's Leasing unit and Japan's Orix Corp. and is expected to result in a deal worth $3–$4 billion.

Entities like Century Tokyo Leasing, sovereign wealth fund China Investment Corp, CDB Leasing along with some global pension funds and insurers have also been invited to bid for the aircraft leasing assets.

Per the Reuters report, “The strong line-up of Chinese and Japanese suitors in the auction underscores the growing importance of cashed-up Asian lessors who are investing billions of dollars in a sector that offers stable, long-term and dollar-based revenue.”

CIT's leasing unit owns, finances and manages a fleet of more than 350 planes. The first-round bids for it are due in Jun according to the sources familiar with the matter. CIT Commercial Air has assets valued at around $11 billion and about 100 customers including Delta Air Lines (NYSE:DAL) and China Eastern Airlines.

According to the sources, some of the potential bidders will be given access to detailed financials of CIT's unit in a few weeks.

There has been a growing trend among companies to invest in aviation financing owing to expectations of "mid to single digit" returns and relatively less challenges than real estate and stocks. Additionally, Asia’s aviation industry has experienced remarkable growth over the past decade.

Currently, CIT holds a Zacks Rank #5 (Strong Sell). Some better-ranked companies in the same space include Apollo Residential Mortgage, Inc. (NYSE:AMTG) , Euronet Worldwide, Inc. (NASDAQ:EEFT) and Grupo Financiero Banorte, S.A.B. de C.V. (OTC:GBOOY) . Each of these stocks carries a Zacks Rank #2 (Buy).


CIT GROUP (CIT): Free Stock Analysis Report

GRUPO FIN BANOR (GBOOY): Free Stock Analysis Report

EURONET WORLDWD (EEFT): Free Stock Analysis Report

APOLLO RES MTGE (AMTG): Free Stock Analysis Report

Original post

Zacks Investment Research