Soros and Dell back Waypoint helicopter leasing group

May 5, 2013
Source:  Financial Times

The funds of two of the world’s highest-profile individual investors – Michael Dell and George Soros – are betting on future high levels of offshore oil production by investing hundreds of millions of dollars in a helicopter leasing company.

Waypoint Leasing is one of only two significant lessors of helicopters, alongside Ireland’s Milestone Aviation, and plans to build up a fleet of up to about 65 aircraft. The fleet will mainly be aimed at meeting fast-growing demand for helicopters to ferry workers to and from offshore oil and gas platforms, which are gradually moving further from land.

Mr Dell’s family investment vehicle, MSD Capital, and Mr Soros’s private vehicle, Quantum Strategic Partners, are the two biggest investors of three that have invested $375m in Waypoint. Two people involved said both MSD and Quantum had taken equal stakes, while a third investor, Cartesian Capital, had taken a smaller stake. The firms are expected to announce the investment formally early this week.

Ed Washecka, Waypoint’s chief executive, founded the company in 2011 after leaving Era, the helicopter arm of Seacor Holdings, the supplier to the offshore oil and gas industry.

Mr Washecka said Era had made better returns from leasing helicopters it owned to other operators than in its main business operating helicopters for end customers such as oil majors. However, while there was intense competition in the business to lease commercial fixed-wing passenger jets, there was very little leasing of commercial helicopters.

He had consequently decided after leaving Era to start his own helicopter leasing company, Mr Washecka said.

“It’s not an incredibly huge market – but the opportunity was there,” he said.

Demand to lease helicopters would grow, Mr Washecka said, as offshore hydrocarbon production moved further offshore. Journeys to rigs and platforms in areas such as Brazil’s pre-salt offshore drilling areas are often 150 miles or more, compared with the 80 miles more typical of older offshore areas such as the North Sea or Gulf of Mexico.

Big helicopter operators – such as the UK’s Bristow Helicopters and Canada’s CHC – would increasingly lease some aircraft while owning others, to improve their financial flexibility, according to Mr Waschecka.

“They don’t necessarily want to have all these assets on the balance sheet,” he said.

Demand for helicopters would stay strong even if oil prices fell sharply, Mr Washecka added. They tended to ferry workers to and from production rigs, which generally kept operating through periods of low oil prices, rather than to and from exploration rigs, which shut down in high-cost offshore areas when prices fell.

The company will also lease to the growing number of privately operated search and rescue and emergency medical services. It will not, however, lease smaller executive helicopters.

MSD and Quantum often invest alongside each other. A person involved said MSD had led the transaction.

Bill Jarosz, a partner at Cartesian, said the company had invested in Waypoint partly because of its “unusually strong management team”.

There was also less volatility in the value of helicopters than other transport assets such as ships or fixed-wing aircraft.