AVIC International Leasing has emerged as the financier behind Navios Maritime Acquisition’s sale-and-leaseback deal for five product tankers, continuing its pace of expansion since last year.
Industry sources suggested that the Chinese lessor paid $103.2m for the 50,000-dwt Nave Alderamin, Nave Capella and Nave Titan (all built 2013), as well as the 75,000-dwt Nave Andromeda (built 2011) and Nave Estella (built 2012).
While product tankers have shown promising earnings prospects due to the upcoming IMO 2020 regulations, TradeWinds understands AVIC Leasing mainly viewed this deal as a financing project rather than asset play.
“This project is a decent deal for AVIC Leasing,” a source said.
In April, Navios Acquisition announced the five-tanker deal that would clear the New York-listed Navios Maritime Holdings spin-off of any maturing debt for more than a year but did not identify the buyer.
The Greek owner has leased those vessels back for seven years on bareboat terms, with a purchase obligation priced at $29.7m upon charter expiry. It will pay AVIC Leasing $2.3m per quarter plus interest at 350 basis points over Libor during the lease period.
Still active
AVIC Leasing, which is part of Chinese state-owned aerospace and defence juggernaut Aviation Industry Corp of China (AVIC), has been actively growing its business in the past few quarters.
Based on Smarine Advisors’ estimates, AVIC Leasing's total shipping drawdowns amounted to $1.1bn in 2018, while the size of its shipping assets reached $2.1bn as of the end of last year.
The ambition came as AVIC Leasing boosted its liquidity by selling new shares to other AVIC affiliates for CNY 5bn ($727m) last October, which built its war chest.
Last month, AVIC Leasing also acquired six 2015-built ultramax vessels from Scorpio Bulkers and bareboat leased them back for eight years. Scorpio is obliged to buy those vessels when charters expire.
“This year, the company is retaining the pace of development as seen in 2018,” the source said.
AVIC Leasing is ultimately controlled by AVIC Capital, a Shanghai-listed subsidiary of AVIC. Its business is not expected to be affected by the planned yard sale of Hong Kong-listed AVIC International Holdings, another subsidiary of AVIC.
“In terms of corporate structure, AVIC Leasing and the AVIC yards are under different listed units,” the source said.
China Merchants Group, which is acquiring AVIC International’s shipbuilding business, also has its own leasing operations, but the source said the two state conglomerates do not plan to combine their leasing businesses.
In its latest quarterly report, AVIC Capital said the expansion of AVIC Leasing helped boost its revenues. The company recorded revenues of CNY 2.08bn in January to March, up 41.7% year on year.
