As a leading maintenance, repair, and overhaul (MRO) company, ST Engineering plays a key role in servicing many popular aircraft models, such as the Airbus A330, A321 and A320. Besides expanding hangar capacity, ST Engineering sees the securitisation of related aircraft, engines, and other critical parts as part of the “next bound” of growth for the commercial aerospace segment.
This is not new, though. It had started doing so back in early 2020 before the pandemic grounded the entire aviation industry. As traffic has recovered to pre-pandemic levels, the growing demand for capacity, plus the capital needed to deploy and maintain assets, means this securitisation business is starting to garner interest again.
Chong aims to attract investors to help chip in the capital to build up the asset base while ST Engineering can take a management fee, not unlike asset managers. “It’s almost analogous to a REIT, but of course, we’re not open to retail investors; we are like the manager of the assets.”
As of the end of 2024, the portfolio of assets under management was US$2.3 billion ($3.08 billion). The current aim is US$3.5 billion by 2029. If this business achieves a certain scale, a separate listing is not off the table, says Chong, although he stresses that the primary focus at the present is to build up a better track record.
See also: ST Engineering’s Chong stays cool even as defence stocks cook off
“We are an MRO specialist, so we are able to differentiate between the well-maintained engines and aircraft against those that are not. So we can be very selective in the assets that we bring into our portfolio because we have the capabilities to make those assessments, which is the reason why this model really works well for us,” he says.
Read the full cover story:
