Hutchinson Whampoa increasing stake in Gama Aviation

Gama Aviation has agreed to let Hutchison Whampoa China increase its stake in the business aviation company to 30%. Hutchinson, a division of Hong Kong conglomerate CK Hutchison Holdings, took a 24.9% stake in Gama Aviation in 2018.

“The main rationale is that Hutchinson think our stock is pretty cheap at the moment, have faith in the business and want to increase their stake,” says Marwan Khalek, CEO and founder of Gama Aviation.

Shares in Gama Aviation were trading at £0.208.50 at the end of April 2018. They were at £0.69.5 on Tuesday April 23 this year rising to £0.93 on Friday April 26 – possibly boosted by the Hutchinson announcement.

“We have made some mistakes – including missing guidance, which is a cardinal sin, and we are paying the price for that – but we are still a profitable, cash generative business with a strong strategy,” says Khalek.

Hutchinson become an anchor investor in Gama in February 2018 when Gama raised £48 million ($67 million) in a share issue. The Hong Kong group bought 21% of the company. At the same time Gama used $19.8 million of the issue’s proceeds to acquire Hutchison’s Hong Kong aviation interests: its 50% stake in a joint venture with the business operator — Gama Aviation Hutchison Holdings — and Hutchinson’s 20% stake in maintenance company China Aircraft Services Limited (“CASL”).

At the start of April, Gama appointed Simon To as non-executive chairman. To is managing director of Hutchison Whampoa (China) Limited and chairman of Hutchison China Meditech a biopharmaceutical company listed on the AIM and Nasdaq with a market capitalisation of around £3 billion.

He, was already a non-executive director of Gama, has also served on the boards of China Southern and Air China. He has been vice chairman of maintenance company GAMECO since 1989 and is chairman of China Aircraft Services Limited, in which Gama Aviation has a 20% shareholding.

Michael Peagram, a non-executive director, has retired from the Gama board with Christopher Clarke and Michael Howell appointed as new independent non-executive directors.

Clarke has more than 30 years’ experience as a senior partner with leading international law firms in Asia and has been a non-executive director for Hong Kong, UK-listed and private companies.

Howell worked at Cummins Engine Company and GE in the US. He was a non-executive director of UK rail company Railtrack Group during its privatisation. He also served as a non-executive director of Hutchison China Meditech.