Japan’s biggest trading company and Asia’s richest man have teamed up in an $800m aircraft leasing joint venture, betting that cheap debt and strong demand from low-cost carriers will sustain a multiyear boom.
Mitsubishi Corp will get the venture started by selling it 15 of the 79 planes owned by its aviation finance unit, MC Aviation Partners. MCAP, which is wholly-owned by Mitsubishi, will contribute 40 per cent of the venture’s equity, with the remainder coming from Cheung Kong Holdings, the main investment vehicle of Li Ka-shing, the Hong Kong-based billionaire.
The planes – new, narrow-body aircraft from Airbus and Boeing – have a combined appraisal value of about $800m, according to MCAP. Assuming that banks provide loans of between 60 per cent and 80 per cent of that value, the partners will contribute equity of $160m to $320m.