Allco Plans to Raise A$500 Million for Aircraft Fund (Update2)
By Joyce Moullakis
June 6 (Bloomberg) -- Allco Finance Group Ltd., an Australian manager of property and aircraft, plans to raise as much as A$500 million ($418 million) for an aviation investment fund, two people with knowledge of the matter said.
Allco will seek commitments for the fund, which won't be publicly traded, from institutional investors over the next three months, according to the people, who declined to be identified because details are private.
The firm will increase management fees by creating the fund amid rising global airline passenger and cargo traffic, which are forecast to grow about 5 percent this year, according to the International Air Transport Association. Sydney-based Allco owned and managed 41 airplanes at the end of last year.
``Allco is certainly looking at alternative investments to carve out a niche in new markets,'' said Atul Lele, who helps manage the equivalent of $380 million at White Funds Management in Sydney, including finance stocks. ``New funds generally mean new income streams and management fees are generated.''
Allco wants to raise A$300 million to A$500 million for the fund, which will hold aviation assets including aircraft and the income derived from them, the people said. Christine Bowen, a Sydney-based spokeswoman for Allco, said the company plans to develop ``a series'' of funds. She declined to comment on specific investment vehicles.
White Funds' Lele said the cyclical nature of the airline industry means an aviation fund may be a riskier investment than one holding toll-road or utilities assets.
Stock Declines
Shares of Allco have declined 10 percent this year compared with an 12 percent gain in Australia's S&P/ASX 200 index. The stock closed 1 cent lower at A$11.55 in Sydney today.
The firm was a member of the Macquarie Bank Ltd.-led group that failed last month with an A$11.1 billion buyout of Qantas Airways Ltd., Australia's biggest airline.
``Up until recently Allco hasn't had the scale or diversity in their leasing assets to create a specialist fund,'' said Andrew Hills, an analyst at Wilson HTM in Sydney with a ``buy'' rating on Allco.
The company buys assets such as property, ships and aircraft that it can bundle into investment funds and manage for a fee.
Allco's assets under management held in funds jumped 36 percent to A$6 billion in the six months ended Dec. 31. The firm raised A$500 million selling stock in December to fund acquisitions and international expansion.
Showing posts with label aircrafts. Show all posts
Showing posts with label aircrafts. Show all posts
Wednesday, June 6, 2007
Wednesday, May 23, 2007
SIA may expand routes to China
Singapore Airlines Shares Gain on China Eastern Talks (Update2)
By Chan Sue Ling and Chua Kong Ho
May 23 (Bloomberg) -- Shares of Singapore Airlines Ltd., Asia's most profitable airline, rose on speculation it's close to buying a stake in China Eastern Airlines Corp. to expand its reach in the world's fastest-growing major economy.
Singapore Airlines is in ``advanced'' talks for a potential investment, it said late yesterday, without elaborating. China Eastern today said it's preparing to disclose ``important matters.'' China's third-largest airline said on May 14 it had begun government-level talks about selling a stake.
The investment would give Singapore Airlines more access to passengers and cargo in an air travel market forecast to grow fivefold by 2025. China Eastern, the nation's only unprofitable carrier last year, would reduce debt and gain a partner to help fend off competition from Cathay Pacific Airways Ltd. and Air China Ltd. in its Shanghai base.
``Getting that foothold is important,'' said Christopher Wong, who helps manage $25 billion at Aberdeen Asset Management in Singapore, including shares of Singapore Airlines. ``Shanghai is an important hub and having a foothold can bring the wider operations of Singapore Airlines to a different level.''
Shares of Singapore Airlines added 20 cents, or 1.1 percent, to S$18.60 as of the 12:30 p.m. trading break in Singapore.
Singapore Airlines, which made a record S$2.12 billion ($1.39 billion) profit last fiscal year, can buy a maximum 25 percent stake in a Chinese carrier, according to China's rules.
A quarter of China Eastern will cost HK$9.55 billion ($1.22 billion), based on the company's current market capitalization.
``Hidden Gem''
The purchase will help Singapore Airlines build on its 104 flights a week to Chinese cities including Beijing and Shanghai. It may also complement the cargo operations.
``Cargo is the hidden gem in this deal,'' said James Chua, who helps manage about $200 million at Phillip Capital Management in Singapore, including shares of Singapore Airlines. ``If you want to ship goods from one part of China to another, you have to use a Chinese airline.''
Singapore Airlines' cargo unit, the state-owned investment company Temasek Holdings Pte, and China Great Wall Industry Corp. in 2005 announced a joint venture cargo carrier in China.
``The domestic aviation market in China is restricted and there's no way foreign airline can get routes unless they pair up with a local player,'' said James.
Shares of China Eastern, the nation's third-largest carrier, have more than doubled in Hong Kong this year, raising its market capitalization to $4.88 billion, according to data compiled by Bloomberg. The stock rose 7.8 percent to HK$3.73 in Hong Kong Monday and gained 3.6 percent to 9.59 yuan in Shanghai.
Competition
China Eastern shares will resume trading after the announcement. The carrier expects to post a first-half loss because of debts and more competition, it said on April 27. The airline is facing increasing competition from Cathay Pacific and other carriers in Shanghai, China Eastern's home market.
``Nothing has been finalized,'' Luo Zhuping, China Eastern's board secretary said by telephone today. The carrier has no timetable set to make an announcement, he said.
Any agreement ``is subject to official approval,'' Singapore Airlines said in its statement yesterday.
The purchase may help the Singapore carrier to compete with Hong Kong's Cathay Pacific in the north Asian market.
Cathay Pacific, Hong Kong's largest airline, has built a 17.5 percent stake in Air China, the nation's largest international carrier. Air China controls a similar-sized stake in Cathay Pacific following a wider deal last year, centered on Cathay Pacific's takeover of Hong Kong Dragon Airlines Ltd.
Qantas, British Airways
Qantas Airways Ltd., Australia's largest airline, last month agreed to buy 30 percent of Vietnam's Pacific Airlines. British Airways Plc said yesterday it plans to support private- equity investor TPG Inc.'s bid for Iberia Lineas Aereas de Espana SA to protect the U.K. airline's stake in the carrier.
Singapore Airlines hasn't taken a stake in another passenger carrier since Chief Executive Officer Chew Choon Seng took office in June 2003.
``This is a clear message that SIA wants a deal that makes sense,'' Peter Negline and Winnifred Heap, analysts at JP Morgan Securities Ltd., which has a ``neutral'' rating for shares of Singapore Airlines, or SIA, wrote in a note yesterday.
``If anything, we see this as a point scored for SIA's CEO, who has clearly indicated that he will not do just any deal.''
Under his predecessor, Cheong Choong Kong, the carrier bought 49 percent of Virgin Atlantic Airways Ltd. and a 25 percent stake in Air New Zealand Ltd. This was written off in 2002 when the New Zealand government bailed out the carrier.
Singapore Airlines history dates back to 1947 when Malayan Airways Ltd. Airspeed Consul started, according to its Web site. The carrier was known as Malaysian Airways Ltd. in 1963, when Singapore and Malaysia were united under a federation, and was renamed Malaysia-Singapore Airlines three years later.
The airline split into Singapore Airlines Ltd. and Malaysian Airline System Bhd. in 1972.
By Chan Sue Ling and Chua Kong Ho
May 23 (Bloomberg) -- Shares of Singapore Airlines Ltd., Asia's most profitable airline, rose on speculation it's close to buying a stake in China Eastern Airlines Corp. to expand its reach in the world's fastest-growing major economy.
Singapore Airlines is in ``advanced'' talks for a potential investment, it said late yesterday, without elaborating. China Eastern today said it's preparing to disclose ``important matters.'' China's third-largest airline said on May 14 it had begun government-level talks about selling a stake.
The investment would give Singapore Airlines more access to passengers and cargo in an air travel market forecast to grow fivefold by 2025. China Eastern, the nation's only unprofitable carrier last year, would reduce debt and gain a partner to help fend off competition from Cathay Pacific Airways Ltd. and Air China Ltd. in its Shanghai base.
``Getting that foothold is important,'' said Christopher Wong, who helps manage $25 billion at Aberdeen Asset Management in Singapore, including shares of Singapore Airlines. ``Shanghai is an important hub and having a foothold can bring the wider operations of Singapore Airlines to a different level.''
Shares of Singapore Airlines added 20 cents, or 1.1 percent, to S$18.60 as of the 12:30 p.m. trading break in Singapore.
Singapore Airlines, which made a record S$2.12 billion ($1.39 billion) profit last fiscal year, can buy a maximum 25 percent stake in a Chinese carrier, according to China's rules.
A quarter of China Eastern will cost HK$9.55 billion ($1.22 billion), based on the company's current market capitalization.
``Hidden Gem''
The purchase will help Singapore Airlines build on its 104 flights a week to Chinese cities including Beijing and Shanghai. It may also complement the cargo operations.
``Cargo is the hidden gem in this deal,'' said James Chua, who helps manage about $200 million at Phillip Capital Management in Singapore, including shares of Singapore Airlines. ``If you want to ship goods from one part of China to another, you have to use a Chinese airline.''
Singapore Airlines' cargo unit, the state-owned investment company Temasek Holdings Pte, and China Great Wall Industry Corp. in 2005 announced a joint venture cargo carrier in China.
``The domestic aviation market in China is restricted and there's no way foreign airline can get routes unless they pair up with a local player,'' said James.
Shares of China Eastern, the nation's third-largest carrier, have more than doubled in Hong Kong this year, raising its market capitalization to $4.88 billion, according to data compiled by Bloomberg. The stock rose 7.8 percent to HK$3.73 in Hong Kong Monday and gained 3.6 percent to 9.59 yuan in Shanghai.
Competition
China Eastern shares will resume trading after the announcement. The carrier expects to post a first-half loss because of debts and more competition, it said on April 27. The airline is facing increasing competition from Cathay Pacific and other carriers in Shanghai, China Eastern's home market.
``Nothing has been finalized,'' Luo Zhuping, China Eastern's board secretary said by telephone today. The carrier has no timetable set to make an announcement, he said.
Any agreement ``is subject to official approval,'' Singapore Airlines said in its statement yesterday.
The purchase may help the Singapore carrier to compete with Hong Kong's Cathay Pacific in the north Asian market.
Cathay Pacific, Hong Kong's largest airline, has built a 17.5 percent stake in Air China, the nation's largest international carrier. Air China controls a similar-sized stake in Cathay Pacific following a wider deal last year, centered on Cathay Pacific's takeover of Hong Kong Dragon Airlines Ltd.
Qantas, British Airways
Qantas Airways Ltd., Australia's largest airline, last month agreed to buy 30 percent of Vietnam's Pacific Airlines. British Airways Plc said yesterday it plans to support private- equity investor TPG Inc.'s bid for Iberia Lineas Aereas de Espana SA to protect the U.K. airline's stake in the carrier.
Singapore Airlines hasn't taken a stake in another passenger carrier since Chief Executive Officer Chew Choon Seng took office in June 2003.
``This is a clear message that SIA wants a deal that makes sense,'' Peter Negline and Winnifred Heap, analysts at JP Morgan Securities Ltd., which has a ``neutral'' rating for shares of Singapore Airlines, or SIA, wrote in a note yesterday.
``If anything, we see this as a point scored for SIA's CEO, who has clearly indicated that he will not do just any deal.''
Under his predecessor, Cheong Choong Kong, the carrier bought 49 percent of Virgin Atlantic Airways Ltd. and a 25 percent stake in Air New Zealand Ltd. This was written off in 2002 when the New Zealand government bailed out the carrier.
Singapore Airlines history dates back to 1947 when Malayan Airways Ltd. Airspeed Consul started, according to its Web site. The carrier was known as Malaysian Airways Ltd. in 1963, when Singapore and Malaysia were united under a federation, and was renamed Malaysia-Singapore Airlines three years later.
The airline split into Singapore Airlines Ltd. and Malaysian Airline System Bhd. in 1972.
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