China’s ICBC Leasing provides $210 million to VistaJet with innovative landmark deal
ICBC Leasing, a subsidiary of Industrial and Commercial Bank of China, has financed five Bombardier Global 6000 aircraft for Europe’s VistaJet.
This is the first time a Chinese institution has financed foreign business aircraft.
The complicated deal involved more than five countries and took over a year to structure. Export Development Canada provided debt to ICBC Leasing’s Irish subsidiary. ICBC Leasing Ireland then leases the aircraft on to VistaJet a Swiss company with the aircraft listed on the Malta aircraft registry.
Because the aircraft were financed through Dublin, ICBC Leasing did not need to get approval from the State Administration of Foreign Exchange of the People’s Republic of China. It can take months for a leasing company to get SAFE approval to lend dollars.
It is also the first time a Chinese financial institution has obtained export credit support under the new OECD Aircraft Sector Understanding rules.
ICBC Leasing, which is regarded as one of the most innovative Chinese leasing companies, signed a memorandum of understanding with Bombardier to provide funding support to the buyers of Bombardier aircraft and rail products in 2011. It was the first Chinese leasing company to finance a business jet in China and recently placed an order for 10 Legacy 650 aircraft.
“We are committed to develop our corporate jet business globally with our partners, such as VistaJet, Bombardier and EDC,” said Cong Lin, CEO of ICBC Leasing. “This deal marks milestone in the history of the Chinese leasing industry.”
VistaJet which has taken 50 aircraft from Bombardier is one of the manufacturer’s largest business jet customers. It only operates Bombardier aircraft and has a $2 billion backlog with the manufacturer. It has recently used export credit support from both EDC and the Export-Import Bank of the US.
“We are delighted to have partnered with ICBC Leasing, the China’s leading financial institution and a major player in the business aviation space, as we look to fast-track the expansion of our fleet,” says Thomas Flohr, chairman and founder of VistaJet. “We recently announced historic agreements with partners in China and Russia that will see VistaJet significantly increase its presence in these countries. In just a few months since the announcements, we have seen extraordinary levels of demand and we’ve concluded that, along with the growth we are seeing in other markets, we must bring forward our plans for fleet expansion.”
Several other Chinese leasing companies are looking to replicate the deal using Hong Kong and Irish subsidiaries.