KKR Takes $100 Million Stake in Helicopter Leasing Business

KKR & Co., a New York-based private equity company, agreed to invest more than $100 million in Lease Corporation International’s helicopter unit to tap growing demand from the oil and gas sector.

In exchange, KKR will receive a minority equity stake in Dublin-based LCI’s helicopter arm, according to a joint statement from the companies today. “Having a strong investor like KKR joining us right now allows us to accelerate our business plan,” LCI Chairman Crispin Maunder said by telephone.

LCI, owned by New York-based Libra Group, entered the helicopter market in 2012 when it committed to spend as much as $400 million to buy a fleet of Finmeccanica SpA AgustaWestland choppers. A follow-on deal was signed last year.

“We believe the nascent helicopter leasing industry will offer attractive risk-adjusted returns to early entrants like LCIH,” Craig J. Farr, chief executive officer of KKR Financial Holdings, said in the statement. “We are pleased to be partnering with LCIH to help grow its helicopter leasing business.”

LCI is considering the purchase of Airbus Helicopter EC225s and EC175s choppers and S-92s built by United Technologies Corp.’s Sikorsky unit, Crispin said. Further AgustaWestland orders, to augment AW139, AW169 and AW189s already bought, are also possible, he said.

“We are looking at the medium-to-large category of helicopters which are relevant to the offshore oil and gas sector, search-and-rescue, and emergency helicopter services,” Crispin said.

Expansion Program

Growth plans could see the unit reach about $450 million of assets under management by the end of the year and $1 billion in about three years, Crispin said. The fleet may also grow through sale-and-leaseback arrangements with operators.

LCI has placed helicopters with operators including Malaysia’s Weststar Aviation Services, in which KKR agreed to buy a stake of about $200 million last year, and Avincis Group, parent of Bond Offshore Helicopters.

Today’s announcement comes two months after rival Waypoint Leasing, whose backers include Soros Fund Management LLC, secured additional borrowing capacity to expand its helicopter leasing business. The Limerick, Ireland-based business secured a revolving credit line that could reach $550 million, it said Nov. 13.

(Updates with Waypoint Leasing detail in last paragraph.)
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