Leading Hong Kong tycoons turn their backs on jet leasing

Hong Kong tycoons Li Ka-shing and Henry Cheng are both retreating from aircraft leasing, a business into which they had steered their wide-ranging conglomerates over the past decade to diversify risk and revenues globally. The COVID pandemic hit the sector hard, as airlines with few passengers struggled to keep up with lease payments or went out of business. The Ukraine war has added to lessors' woes, with Western sanctions compelling many of the finance companies to ask for their planes back from Russian clients while Moscow restricts them from leaving. Against this backdrop, the sector is seeing a new wave of consolidation. The Cheng family is the latest to exit, agreeing late Monday to sell its Goshawk Aviation business, which has 222 jets, to Japan's SMBC Aviation Capital for $1.57b. The deal will make the Japanese group, part of Sumitomo Mitsui Finance and Leasing, the second-largest lessor globally by fleet size, with 709 owned or managed planes. SMBC and Goshawk together have about 300 jets on order. The deal comes a month after Li and his son Victor exited the sector by selling the two holding companies under their AMCK Aviation unit, which together owned a fleet of about 140 aircraft, to an investment vehicle managed by Carlyle Group for $4.28 billion. The U.S. private equity group last year bought lessor Fly Leasing from investors including Malaysia's AirAsia Group for $520m. The Cheng and Li families originally entered jet leasing together, joining Anglo-South African finance group Investec as co-owners of Goshawk in 2013. But within three years, the Chengs had bought out both Investec and the Lis, dividing ownership of Goshawk evenly between NWS Holdings, their Hong Kong-listed infrastructure company, and Chow Tai Fook Enterprises, the family's private holding company.<br/>