Cinven et al. fully exit Avolon in $7.6bn take-private

JosУЉ Rojo
04 September 2015

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Cinven, CVC Capital Partners and Oak Hill Capital Partners have exited their remaining stakes in Irish aircraft leaser Avolon as part of its $7.6bn delisting by corporate buyer Bohai Leasing.

The take-private, expected to complete in Q4 2015, will see Avolon merge with its new owner Bohai Leasing, a listed business unit within Hainan Airlines Group.

At $31 per share, the purchase price to be paid by Bohai represents a 55% premium on Avolon's $20 share price when it listed on the New York stock exchange nine months ago.

The return reaped by CVC, Cinven and Oak Hill was not disclosed, but unquote" sources confirmed it reached the 2.3x mark as far as CVC and Cinven are concerned. Both firms held identical 17.3% shareholdings after a partial sell-down during Avolon's IPO.

The final exit by Cinven, CVC and Oak Hill comes five years after they financed Avolon's creation alongside a management team led by CEO Dómhnal Slattery. According to unquote" data, the deal had a total value of $1.4bn, of which $750m was provided by the three firms – all contributed equally.

The takeover, inked in May 2010, was supported by a $400m warehouse debt package arranged by UBS, with contributions from Crédit Agricole, Deutsche Bank and KfW Ipex-Bank. An additional $215m in term debt was provided by DVB Bank.

Avolon remained in private hands until December 2014, when it filed for an IPO on the New York stock exchange. The flotation saw both CVC and Cinven partially divest their minority stakes and retain 14 million shares, the equivalent of a 17.3% stake.

According to Cinven, its interest in assets within the aircraft leasing segment dates back to 2009, when the economic crisis brought down several of Avolon's competitors while demand for leasing services stayed solid in the market.

Along with the other shareholders, the GP has supported Avolon as it expanded across markets like Asia and the Middle East, with the opening of offices in Singapore and Dubai.

Avolon's aircraft fleet has grown from 26 to 260 vehicles in the past five years, while revenues and EBITDA are understood to have seen a fivefold increase.

Company
Avolon was founded in 2010 by current CEO Dómhnal Slattery with capital from Cinven, CVC and Oak Hill. The business provides aircraft leasing services to a 56-strong customer base across 33 countries worldwide.

Headquartered in Dublin, the company operates additional offices in the US, Dubai, Singapore and China. With a workforce of 63 people, the business posted $697m in revenues and a $582m EBITDA in the year ending June 2015.

People
Cinven's work on the deal was led by Caspar Berendsen, a partner within the financial services team. Peter Rutland is co-head of global financial services at CVC. Domhnal Slattery founded Avolon and is the company's current CEO.

Advisers
Acquirer – Bravia Capital (Corporate finance); Sidley Austin (Legal).
Company – JP Morgan (Corporate finance); Morgan Stanley (Corporate finance); Weil Gotshal & Manges (Legal).