• Published on 20 December 2023
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SMBC completes its first $120M aircraft finance lease transaction

Sumitomo Mitsui Banking Corporation (SMBC) has recently closed a $120 million aircraft secured debt facility to finance the purchase of an A350-900 aircraft delivered by Airbus to Air India.

SMBC was the sole bank in the transaction. The transaction was orchestrated with the assistance of Air India’s wholly owned subsidiary in Gujarat International Finance Tec-City (GIFT City), AI Fleet Services, as part of Air India’s order of 470 aircrafts placed earlier this year. Air India has also put in the equity component for the aircraft.

Commenting on the transaction, Hiroyuki Mesaki, country head of SMBC India, said: “The deal contributes to SMBC’s strong credentials globally in the aviation transportation business, with the onboarding of Tata Group-owned Air India into the bank’s portfolio. SMBC Group is pleased to expand upon its long-established relationship with Tata Group through this deal. Through an innovative GIFT City structure, we have successfully completed this aircraft secured debt facility amid a fast-growing Indian market, marking the bank’s first aircraft finance lease transaction of its kind.”

Nipun Aggarwal, chief commercial and transformation officer at Air India said: “We are pleased to partner with SMBC in this financing of an A350-900 aircraft, which is among the first deliveries of our large aircraft order. This transaction is also a major step in expanding our aircraft financing business through GIFT City, India’s first International Financial Services Centre.”

India is the fifth largest aviation market globally, backed by the emergence of a large and growing middle-class willing to travel. Significant growth in the sector is expected to continue, as evidenced by the large orders placed across the Indian aviation industry to satisfy rising demand. This deal will further aid SMBC in penetrating the fast-growing aviation market.

Re-disseminated by The Asian Banker