Private equity firm Carlyle Group said on Monday an affiliate of Carlyle Aviation Partners, its aviation investment arm, will buy aircraft leasing company Fly Leasing Ltd for an enterprise value of $2.36 billion.
Shareholders of Fly Leasing would get $17.05 per share in cash, valuing the company at $520 million. The price represents a premium of 29% to the stock’s closing price on Friday.
“We believe in the long-term resilience of the aviation industry. History tells us when we get past a crisis, we will see a return of traffic as people return to traveling. We think we are buying this at an attractive price,” Robert Korn, president, and co-founder of Carlyle Aviation Partners said.
The COVID-19 pandemic has hit demand for air travel as people choose to stay at home instead. The aviation industry is betting on pent-up demand for travel for a recovery, especially as more people get vaccinated.
Two low-cost carriers Sun Country Airlines and Frontier Holdings planned their initial public offerings recently, preparing for such a rebound.
The deal with Fly, expected to close in the third quarter of 2021, will use funds from Carlyle Aviation’s fifth aviation fund, SASOF V, the company said.
Fly Leasing buys aircraft and leases them under contracts to airlines around the world. Its fleet consists of 84 aircraft including Airbus A320, Boeing 737 MAX, and others.
Carlyle Aviation Partners, founded in 2002, has $6.1 billion of assets under management and 93 airline companies leasing its planes, it said.
RBC Capital Markets was the financial adviser to Carlyle Aviation.