Terra Firma eyes AIG's air finance unit

The UK-based buyout house has emerged as the third bidder for ILFC. It is competing with two consortia of private equity bidders for the multi-billion dollar business.

UK-headquartered Terra Firma is one of the buyout groups bidding for International Lease Finance Corp (ILFC), the aircraft leasing subsidiary of US insurance group AIG, PEO has confirmed.

Two other possible buyers have emerged: one consortium led by buyout firms Thomas H Lee Partners and The Carlyle Group and another including US- and Canada-based Onex Corporation and Greenbriar Equity Group, a transport-focused private equity firm, according to a report in UK newspaper the Financial Times.

Terra Firma is acting alone, according to a source close to the situation.

The various bids for ILFC are all understood to be below $5 billion, as reported in the Financial Times, below the company's book value of $7.6 billion.

AIG is currently undertaking an asset disposal programme as it seeks to repay $100 million in debt and equity to the US government. It has sold over $3 billion of assets since March this year.

The insurance giant – which is now around 80 percent owned by the US Treasury and New York Federal Reserve – recently sold its subsidiary 21st Century Insurance Group to Zurich Financial Services for $1.9 billion. It also sold AIG Private Bank, its Switzerland-based private banking subsidiary, to Aabar Investments, an Abu Dhabi-listed investment company, for $253 million.

Terra Firma and The Carlyle Group both declined to comment on the ILFC sale process, while all other parties contacted were unavailable to comment.