CDB considers sale of leasing arm

Trading in shares of China Development Bank Financial Leasing Co. Ltd. (CDB Leasing) was temporarily halted in Hong Kong earlier this week pending an announcement by 64% shareholder CDB. In its announcement, CDB confirmed it was conducting a business assessment of CDB Leasing, including exploring a potential transfer of the company’s shares, although it stressed that no agreement had been reached and that there was no certainty to the outcome of the business assessment.

“Shareholders and/or potential investors of [CDB Leasing] are advised to exercise caution when dealing in the securities of the company,” CDB Leasing said.

CDB Leasing has a large and growing portfolio of assets in shipping, alongside significant interests in aircraft leasing, regional development leasing, and green energy and high-end equipment leasing. 

In its 2023 Annual Report, CDB Leasing said it had a total of 228 ships in operation including 29 on finance lease and 199 on operating leases. The fleet comprised 163 bulk carriers, 38 product tankers, 17 container ships, nine LNG ships and one passenger cruise ship, with a fleetwide average age of 6.4 years.

In May, CDB Leasing announced a new lease deal with Awilco LNG for two LNG vessels at $100m each, with an asset value of $340m. In June, a further four LNG carriers with a value of $477,500,000 were leased to Dynagas.

Related:Non-bank lending takes a larger bite of the ship finance mix

The company’s ship leasing portfolio has grown in recent years, reflecting the rising popularity of leasing as a method of vessel finance. CDB Leasing's ship leasing assets at the end of 2023 totalled RMB62.8bn ($8.6bn) or 15.4% of CDB assets, up from RMB49.7bn and 14.1% at the end of 2022. 

The ship leasing business segment generated RMB1.1bn in profit before income tax in 2023 on revenues of RMB5.9bn.

Shipping assets represented 15.4% of the company's assets at the end of 2023, compared to 32.0% for regional development leasing, 26.7% for aircraft leasing, 17.1% for green energy and high-end equipment leasing, and 8.8% for inclusive finance. 

“The operations of the Company remain stable,” said CDB Leasing.