HNA Group, the Chinese conglomerate, has emerged as a leading bidder for GE SeaCo, the container leasing business put on the block by General Electric and its joint venture partner.
 
People familiar with the matter said that HNA was now vying with Kelso, the private equity group, to buy GE SeaCo, which could fetch $2.5bn to $3bn including debt.
 
While one person following the process suggested that HNA was now considered the front-runner to buy GE SeaCo, others cautioned that GE was still reviewing all its options and no announcement was imminent.
 
GE and Deutsche Bank, which is advising the company, declined to comment. HNA declined to comment, while Kelso did not respond to a request for comment.
 
GE could yet choose to hold onto the business, people familiar with the matter have previously said.
 
The surprise emergence of HNA, which as the parent of Hainan Airlines is China’s fourth-largest airline operator, as a bidder for GE SeaCo underlines the growing influence of China and Chinese capital in the flows of finance and material that underpin global trade.
 
During the global downturn Chinese banks stepped up their involvement in aviation finance, funding foreign airlines to purchase jets. HNA itself purchased a $3bn portfolio of aircraft leasing assets from Allco, the collapsed Australian finance company, in 2010 alongside Bravia Capital, a US private equity group.
 
The sale of GE SeaCo, which is 50 per cent owned by GE’s finance arm, comes after the group pledged to slim down its GE Capital business to focus on mid-market and industrial lending.
 
HNA’s interest could create uncertainty for other operators in the fragmented market for container leasing. Were an existing operator to purchase HNA that would likely remove some capacity from the market, said sector experts. Kelso owns Cronos, an existing container leasing company.
 
However, HNA’s entry to the world of container leasing instead could increase competition, they added.
 
Haikou-based HNA had revenues of €7bn ($11.2bn) last year and owns more than €40bn in assets. As well as Hainan, the group owns Minsheng, a listed department store group, an airport owner and operator, a logistics company and a hotel owner and manager.
 
The acquisitive group earlier this year paid €431.6m for a 20 per cent stake in Spain’s NH Hoteles, which runs 400 hotels in 25 countries.
 
Container leasing has boomed in the past year. Makers of containers in China stopped producing during the downturn leading to a squeeze on supply as the economy picked up and global trade recovered.
 
GE SeaCo has the fifth-largest container leasing fleet in the business with about 870,000 20-foot equivalent units, the standard measure.
 
GE’s original partner, Sea Containers, went bust in 2006 amid disputes over how to manage the asset. Its bondholders eventually took over the stake in GE SeaCo through a new company.


SOURCE: ft.com
 
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