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KKR, AV AirFinance to Purchase CIT Aviation Lending Portfolio

June 11, 2021, 07:25 AM
Filed Under: Mergers & Acquisitions

CIT Group Inc. announced it is selling its aviation loan portfolio to KKR. This is related to a previously announced definitive agreement for a portfolio that has a committed loan balance of nearly $800 million across more than 50 loans for approximately 60 commercial aircraft. The loans have an average yield in the mid-single digits and an average term remaining of approximately four years.

The portfolio will be serviced by AV AirFinance Limited (AV AirFinance), a global commercial aviation loan servicer established by a team of experienced industry professionals together with KKR. As part of the transaction, certain members of CIT's aviation team will also join AV AirFinance where they will focus on servicing and originating loans.

"We are pleased to have reached an agreement with a team that understands the aviation lending business and will serve customers well," said Phil Robbins, CIT President of Asset Management and Capital Markets. "This transaction allows CIT to rebalance our portfolio mix and reinvest in core businesses."

Dan Pietrzak, Partner and Co-head of Private Credit at KKR, commented: "The purchase of this loan portfolio from CIT will be used to seed the launch of our aviation lending business in partnership with AV AirFinance. This transaction marks an exciting new expansion of our asset-based finance strategy into directly originated and held commercial aviation loans, and we believe AV AirFinance is well positioned to become a premier lender for the global commercial aviation market."

The majority of loans have been transferred with the remaining amount expected to be completed by the end of the second quarter of 2021. Upon its completion, CIT will have fully exited its aircraft lending business and remains committed to providing banking and advisory services as part of its core Aerospace, Defense and Government Services business.

The transaction is being funded by separate accounts managed by KKR.

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