KKR Financial Holdings LLC, a subsidiary of global private equity firm KKR & Co LP, has agreed to invest $100 million in LCI Helicopters Ltd (LCIH), a unit of Irish aircraft leasing company Lease Corporation International (LCI), in return for a minority stake in the company in anticipation of growth in the emerging helicopter leasing industry.
The strategic investment will allow LCIH to grow its fleet significantly and advance its leadership position in the rapidly expanding helicopter leasing business, LCI said in a statement.
LCI is part of the Libra Group Ltd, a privately-owned international business group with its headquarters in New York and London and comprising 30 subsidiaries operating across five continents. The group is primarily focused on aviation, shipping, hospitality, energy and real estate.
LCI CEO Michael Platt said,"This transaction deepens our already significant commitment to the rotary wing sector of the aviation market. Our partnership with KKR Financial will provide us with future growth opportunities and further strengthen our position in the marketplace."
LCI, founded in 2004, entered the helicopter leasing business in 2012. The company has ordered $400 million worth of advanced helicopters AW139, AW169 and AW189 from Anglo-Italian helicopter company AgustaWestland which are being delivered over a five-year period.
The helicopters are intended to be deployed on a range of offshore, search and rescue and other operations.
The company plans to expand its fleet significantly with the purchase of helicopters from other leading manufacturers such as Airbus Helicopter and United Technology Corp.
LCIH's customers include several global operators such as UK's Avincis Group, the world's leading provider of mission critical services, Malaysia's Weststar Aviation Services, one of the largest providers of offshore helicopter transportation to oil and gas companies in the Southeast Asia region, and Thailand-based SFS Aviation.
The Company's aircraft are engaged in diverse applications, from oil exploration in the Gulf of Thailand to offshore services off the coast of Africa to crew transportation in the North Sea.
LCIH has a robust pipeline both of lessees and additional helicopter orders that will be announced in 2014, according to the statement.
KKR Financial CEO Craig Farr said: "As a result of related experience through other KKR investments-both in the helicopter space and in the end-markets LCIH serves, such as offshore energy production-we believe the nascent helicopter leasing industry will offer attractive risk-adjusted returns to early entrants like LCIH in the years to come."
Farr added, "With banks more focused on lending against short-lived liquid assets, we continue to see opportunities to put KFN's long-term capital to work alongside proven specialty finance teams like LCIH management."
Teneo Capital and Morgan Stanley & Co LLC acted as financial advisors to LCI on the deal.
KKR Financial Holdings is a specialty finance company and a subsidiary of New York-based global private equity firm Kohlberg Kravis Roberts & Co LP.