INSIGHT: LCI’s helicopter co-investment vehicle – how it works
In October 2019 LCI launched its first ever helicopter 'co-investment vehicle' which enables third party investors to participate in helicopter ownership while leaving the task of leasing the aircraft to operators with LCI. We look in more detail at how such an ownership vehicle works.
Jaspal Jandu, LCI’s Chief Financial Officer said at the time: “LCI is delighted to lead the helicopter leasing sector in launching this new form of ownership. It enables investors to participate at a specific transaction level and we are delighted to be partnering with Flexam whose professionalism in asset financing has been instrumental in executing this transaction.
"There has been strong interest in our first co-investment vehicle and, as a helicopter lessor with a proven platform, management team and track record, we look forward to building upon similar frameworks in the future.”
For leasing companies like LCI, 'sidecar' investment vehicles such as this provide access to capital with which to expand their fleets and stay competitive. It also allows the lessor to share risk with the outside investor while still earning revenue through servicing fees. For the investor, these schemes represents an opportunity to break into a new asset class and learn the leasing business, knowing that they are in a partnership with an established lessor which has strong relationships with both aircraft manufacturers and operators – meaning they enjoy the revenues from leases without the burden of responsibility for creating and maintaining commercial relationships.
Participants in LCI’s new helicopter investment concept will be investing in assets operating critical missions and exhibiting robust residual values and stable cashflows from diverse lessees, with the whole process managed by LCI. They will also be participating in a growth market which over the next 20 years is expected to add 22,000 helicopters globally, valued at £125 billion.
LCI’s new ownership vehicle contains five aircraft all on long-term lease – three Leonardo AW139 and two Sikorsky S-92 units – and is valued at over US$100 million. It has been launched in partnership with Flexam Tangible Asset Income Fund (part of Flexam Invest Group), which has also contributed to the capitalisation.
LCI’s fleet now comprises approximately US$1 billion of assets in service, on order and under control, focused on the latest technology light twin and medium helicopters manufactured by the leading helicopter makers including Leonardo, Airbus and Sikorsky.