Tokyo Century Corporation (TC) has agreed to purchase 20% of Aviation Capital Group (ACG). The deal was signed yesterday between TC and ACG’s parent company, Pacific Life. ACG will become an equity-method affiliate of TC following the acquisition.
In a release, TC confirmed its motivation for acquiring the stake was to expand its leasing business that currently consists of 48 aircraft on its books but the company also has an aircraft parts financing and aircraft/engine debt financing business conducted jointly with GA Telesis.
“Following deliberations of various options to further expand the business, TC has concluded that partnering with a strong player is the optimal solution to expand its aviation related business both from a risk management and growth trajectory perspective and has chosen ACG, a leading commercial aircraft lessor, as its strategic partner and to acquire membership interests in the company.”
TC says it will seek to further expand its aviation-related business and accelerate ACG’s business expansion by providing “future primary capital and creating incremental business opportunities leveraging on TC’s extensive network and expertise.”
Following the acquisition, TC states that it intends to appoint ACG as the servicer to provide technical and remarketing services for a majority of the aircraft owned by TC. New aircraft operating lease business will be mainly developed through ACG. The company says that collaboration with ACG on sourcing assets and structuring transactions will enable it to provide Japanese Operating Lease and Japanese Operating Lease with Call Option (JOL/JOLCO) products and other attractive investment opportunities with its customers.
TC plans to continue to pursue its existing aircraft debt financing business, finance lease business, and businesses conducted jointly with GA Telesis in the area of aircraft parts/aircraft/engine debt financing.
Mitsubishi UFJ, Morgan Stanley Securities and Mizuho Securities acted as financial advisors for this transaction, together with K&L Gates as the legal advisor, Deloitte Tohmatsu Financial Advisory as the accounting advisor, and Deloitte Tohmatsu Tax as the tax advisor IBA was also among the TC advisers.
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