Terra Firma to look at exit options on aircraft lessor Awas-sources

Reuters - UK Focus

By Anjuli Davies and Arno Schuetze

LONDON/FRANKFURT, April 1 (Reuters) - British private equityfirm Terra Firma has appointed Goldman Sachs (NYSE: GS-PB - news) and Deutsche Bank (Xetra: DBK.DE - news) to advise it on what to do withaircraft leasing firm Awas, with possible optionsincluding a stock market listing or complete sale, three peoplefamiliar with the matter said.

Terra Firma bought Awas from Morgan Stanley (Berlin: DWD.BE - news) in 2006 for $2.5billion and a year later acquired rival Pegasus for $5.2billion, merging the groups to create the world's third-largestplane lessor, making it a much larger force in the market, whichhas boomed in the last year or so as airlines look to build upfleets quickly to meet resurgent travel demand.

Any potential IPO is expected to take place in the secondhalf of the year, one of the sources said.

"The strategic review will take some months. Options includeIPO, outright sale, partial sale or do nothing," a second sourcefamiliar with the matter said.

Terra Firma, CPPIB, Goldman Sachs and Deutsche Bank declinedto comment.

Aviation assets have begun attracting the interest oflonger-term investors such as insurers and pension funds hungryfor better returns while interest rates remain low.

Dublin-based aircraft lessor Avolon is also preparing for aninitial public offering this year two people familiar with thematter told Reuters in March.

Awas owned 263 aircraft with a book value of $8.6 billion asof May 2013, leasing them to airlines in 46 countries, with Awasmaking a net profit of $162 million on revenue of $1 billion inits 2012 fiscal year.

Aircraft leasing firms dwarf airlines in terms of fleet sizeand are the biggest and most important customers for planemakerslike Boeing (NYSE: BA - news) and Airbus.

For Terra Firma, which is run by British financier GuyHands, Awas is one of its largest investments. CPPIB, the CanadaPension Plan Investment Board, also owns a significant minoritystake.

Recently sources familiar with the matter said Terra Firmawas planning to launch a new 2 billion-euro fund concentratingon smaller buyouts.

(Reporting by Anjuli Davies and Arno Schuetze; Editing by GregMahlich)

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