Sumitomo Mitsui reaches USD7.3bn deal for RBS Aviation Capital

Sumitomo Mitsui Banking Corporation (SMBC) and Sumitomo Mitsui Finance and Leasing Company (SMFL), both subsidiaries of Sumitomo Corporation (SC), reached (17-Jan-2012) an agreement with The Royal Bank of Scotland Group on the acquisition of RBS Aviation Capital, the company's aircraft leasing arm. RBS Aviation Capital will be acquired for an approximate consideration of USD7.3 billion, subject to certain post closing adjustments. The deal is still subject to regulatory approval and clearance and is expected to be completed in 3Q2012. RBS Aviation Capital is the world's fourth largest lessor at book value, with total assets of USD7.2 billion. SMFL will initially take a 60% shareholding, with SC controlling 40%. Sumitomo Mitsui Finance Group will eventually take 60-70% ownership, with SC retaining a 30-40% share. A detailed shareholding structure is yet to be determined. The Sumitomo consortium will explore long-term funding for the acquisition, including support from export credit agencies and government-affiliated financial institutions, given the current uncertain financial climate.