Two-Part Problem for PE Involvement with IFLC
I was on Reuters Insider earlier today (vid after the jump), to discuss the possibility of private equity firms buying ILFC, the aircraft leasing unit of AIG. Reports are that Carlyle is leading one possible consortium, while Greenbriar Equity and Onex Partners are teaming on another. KKR and TPG each had expressed early interest, but have since bailed. To me, there are two huge obstacles to PE firms buying IFLC: (1) Financing the transaction and (2) Owning and operating IFLC. The first obstacle is obviously first. IFLC reportedly is valued at $8 billion, which would require a minimum of $4 billion or $5 billion in leverage. That type of outlay is theoretically possible, but far from probable. Credit still hasn't loosened much when it comes to large leveraged loans, which means I only see this working if the government steps in as the lender of last resort.
