Bank of China airplane unit’s $1.1b IPO shows Asia shift

The skies above Asia will get more crowded during the next 20 years as airlines acquire planes to fly more passengers from developing economies. That timing couldn’t be better for aircraft leasing company BOC Aviation.<br/>BOC Aviation, an arm of Bank of China, is scheduled to debut on the Hong Kong exchange Wednesday after raising HK$8.7b ($1.1b) in an IPO. The company sold new and existing shares at HK$42 apiece in Asia’s second-biggest IPO this year, and it plans to use the proceeds to help pay for new planes. As airlines serving Asia-Pacific move to triple their fleet, they’re finding it can be cheaper to lease jets instead of buying them from Boeing or Airbus. And for BOC, the leasing business can be more lucrative than running an airline, helping explain why conglomerates led by Hong Kong billionaires Li Ka-shing and Cheng Yu-tung are entering the field. “The Chinese are getting into leasing as they see huge potential in their own market, as well as Asia-Pacific,” said Shukor Yusof, founder of Endau Analytics in Malaysia. “They are flush with cash.” The share offer has attracted such investors as Boeing and sovereign wealth fund China Investment Corp. Airlines in Asia will fly more than 16,000 planes within 20 years, almost tripling the current number, according to estimates by Boeing. BOC Aviation, the biggest lessor in the region, has 270 planes, underscoring the growth prospects in what is set to be the world’s largest aviation market.<br/>