China's Overseas Buying Spree Continues

Having recently made investments in a number of overseas airlines including a pending stake in Virgin Australia, Chinese conglomerate HNA Group’s aviation arm added an MRO to its growing portfolio at the end of last week by buying a majority stake in SR Technics subject to regulatory approval.

Acquiring 80 per cent of the Swiss firm on Friday (July 15) from Mubadala for an undisclosed sum, HNA Aviation will now have a foothold in the European MRO market with its controlling stake in SR Technics, which holds capabilities including line, base and engine maintenance.  

While Chinese companies buying up overseas firms has become a common occurrence in the past 10 years, HNA has had its eyes on Switzerland lately, with the company also set to snap up Swiss flight services specialist Gategroup for $1.5bn in addition to SR Technics.

Further HNA acquisitions in the aviation sector could be on the cards, with group chairman Chen Feng telling the Financial Times earlier in July that he is looking to do more takeovers despite China’s economy stalling in the past year.

While the purpose of HNA’s acquisition is obvious, one has to ponder why Abu Dhabi government-backed Mubadala is selling its majority share in SR Technics. The MRO has performed strongly in recent years and possesses a strong airline customer base. This was further buoyed by last year's $150m contract to provide component support for Etihad’s fleet of 787 aircraft.

According to Bloomberg, Mubadala’s decision to relinquish its majority stake and become a minority shareholder could lie in the global oil price slump, which reportedly led to the state investment group starting proceedings to offload its Swiss asset in February.

But considering that Mubadala unveiled a partnership with Rolls-Royce last week to establish an approved maintenance centre in Abu Dhabi for Trent XWB engine maintenance as part of an existing, long-term aerospace strategy for the UAE state, its MRO activities are clearly far from done.

TAGS: Airframes
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