The announcement comes following a high-profile US$7.3 billion acquisition of RBS’s aircraft-leasing division in June by SMBC. Now under the title of SMBC Aviation Capital, the Dublin based ex-RBS outfit will form the core business around which Sumitomo Mitsui consolidates and plans its future growth in the industry.
 
Peter Barrett, who will remains as chief executive of the new venture, said: “there is likely to be further consolidation in the future, … this transaction will help position us to take advantage of that trend… The merger will add further scale, expertise and product offerings.”
 
The number of owned and managed aircraft will increase from 240 to 331 and will result in the value of SMBC Aviation Capital’s portfolio growing to over US$10 billion, making it the world's fourth largest aircraft lessor. The deal will also mean the addition of 13 new airline customers to SMBC Aviation Capital’s client base, and the company’s total headcount will be increased from around 70 to over 80 employees. The merger is set to be completed in 2013, pending regulatory approval.
 
The heavy-asset market is attracting increased levels of investment against the backdrop of continued global economic slowdown. Investors favour the regular rate of return and relative security that comes with solid high-value stock. The added boon offered by the aircraft-leasing business, total ease of mobility to meet demand wherever it may appear, makes for a particularly enticing investment.
 
Sumitomo Mitsui’s strategic decision to expand capacity also seems particularly prudent in light of the rapid expansion of the Asian air market. China reportedly plans to build 82 new airports within the next five years.