Tuesday, February 17, 2009

China's SWF May Bid on AIG's ILFC

China's sovereign wealth fund may partner with Chinese banks for a bid on AIG's aircraft leasing unit. AIG is owned by America's sovereign debt fund. China's investments in the U.S. fared badly to date. Reuters reported on Chinese Investment Corp's returns:

CIC's two highest-profile investments, stakes in U.S. financial firms Morgan Stanley and Blackstone Group, have incurred substantial paper losses.

Why might they bid on ILFC?

China is making and buying more airplanes and industrial and telecommunications equipment on the back of economic growth and rising consumption. Leasing can be used as an alternative to lending to finance big-ticket purchases by Chinese companies.

China may need roughly 3,000 new airplanes, worth about $300 billion, over the next 20 years, Airbus has forecast.

CIC may want the Carlyle Group's advice on moving aircraft related companies without public outrage. They sold Standard Aero and Landmark Aviation to Dubai Aerospace. Carlyle worked their magic between the Dubai Ports World uproar and the Dubai Borse-NASDAQ concern.