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Standard Chartered is considering another “one or two” aviation finance joint ventures and may list the one it launched in China earlier this year, said Sumit Dayal, the bank’s head of corporate finance.
StanChart’s aviation finance arm Pembroke, and Sichuan Development Holding, the largest state-owned enterprise in the Sichuan province, launched a joint venture in Sichuan last March, giving them a foothold in a market where airlines are set to spend $1tn on aircraft in the next 20 years.
The Chinese market already offers ample capital to airlines, so much so that Chinese money is expected to fund more than a third of the $261bn aircraft leasing market by 2022, according to an aviation data provider.
The Pembroke/Sichuan joint venture focuses on fleet management and re-marketing aircraft when their leases end, leveraging StanChart’s aviation finance experience and Sichuan Development’s local connections.
Sichuan Development is the second-largest shareholder in Sichuan Airport Group, which owns Chengdu Shuangliu International Airport and is building another airport in the region.
StanChart is “open to another one or two joint ventures” on a similar model to “further diversify” its business, Mr Dayal told the Financial Times. The bank has not yet identified into which markets it would launch the ventures, but they are likely to be in its traditional strongholds of Southeast Asia, the Middle East and Africa.
In China, Mr Dayal said StanChart could list the business if it does well in its first three to five years. Last month, the bank took another step into China by launching Pembroke Aircraft Leasing in China’s Dongjiang free trade port in Tianjin.
Pembroke, which has its headquarters in Dublin, manages a fleet of more than 130 aircraft, serving airlines in 29 countries. Mr Dayal said the business was enjoying “good growth” because Standard Chartered and Pembroke can offer airline clients services such as working capital and cash management — which he says that competitors solely focused on leasing cannot provide.
Standard Chartered is trying to diversify its corporate finance business more generally by servicing a broader range of clients who already use Standard Chartered for other day-to-day businesses.
Mr Dayal said Standard Chartered had “materially beefed up” its corporate finance teams in the last year, hiring bankers to support coverage in the UK, parts of Europe and the US and that it was making good progress with its business strategy.