Business / Companies

BOC Aviation ends flat on HK debut

(China Daily) Updated: 2016-06-02 08:24

BOC Aviation Ltd, the aircraft leasing unit of Bank of China Ltd that raised $1.1 billion from a share sale last month, rose as much as 4.4 percent during the intraday trading on its debut in Hong Kong on Wednesday.

Shares in the company closed at HK$42 ($5.4), after jumping as high as HK$43.85 earlier. BOC Aviation 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.

"You have growth and high visibility of earnings and higher returns," said Mohshin Aziz, an analyst at Malayan Banking Bhd in Kuala Lumpur. "People want lower risk returns. The story that Asia is the strongest region for aviation growth for the next 20 years seems to get well."

Asian leasing companies are boosting fleets as the region is set to overtake the United States as the world's largest market for aircraft in two decades.

Economic growth in China, India and Southeast Asia is spurring air travel and encouraging more companies such as billionaire Li Ka-shing's CK Hutchison Holdings Ltd to enter the plane-leasing market, whose returns can exceed those of airlines and are locked in through multiyear contracts.

BOC Aviation's initial public offering attracted 11 cornerstone investors, including Boeing Co, sovereign wealth fund China Investment Corp and Temasek Holdings Pte's Fullerton Fund Management Co, the lessor said on Tuesday. BOC International Holdings Ltd, the parent's overseas investment-banking arm, and Goldman Sachs Group Inc, were joint sponsors of the offering.

China Aircraft Leasing Group Holdings Ltd, which raised HK$728.9 million ($94 million) from an IPO in July 2014, fell on the first day of its trading. The shares of the company are now 44 percent higher than the offer price and trade at 9.48 times their estimated 2016 earnings. The price to earnings ratio for Air Lease Corp is 8.85 and 11.31 for Air Castle Ltd.

Shares in China Zheshang Bank Co, which priced HK's largest IPO this year, are down 1 percent since the offer, based on Tuesday's close.

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