HI Uplift: LEVL Leasing and Investec agree 15-helicopter financing deal

insight

by Mike Stones

23 June 2023

LEVL Leasing, the Lobo Leasing and EMP Structured Assets joint venture, has agreed a 15-helicopter financing deal with South African bank Investec.

The facility covers financing 15 helicopters, including Airbus H125, Airbus H145, Bell 412 aircraft and five specialist fixed wing aircraft. These include AirTractor and AT-802 planes. All the aircraft will be deployed by five lessees for government support services across search and rescue (SAR), emergency medical services (EMS) and firefighting.

They will operate in France, Spain and Kenya. Gustavo Semeraro, senior vice president, Global Business Development, Lobo Leasing told Helicopter Investor what united the three markets. “EMS, SAR and firefighting are very different markets, but with a common theme of government-backed revenue streams and the delivery of critical social requirements,” he told us.

Government contracts often offer more stability and reliability – without the no-fault cancellation provision sometimes seen in private contracts, particularly in the offshore sector. Also, government contracts tend to be longer in duration.

Incorporating these elements into a portfolio was at the heart of LEVL Leasing’s strategy since its launch in June 2022.

“We have been patiently building up the portfolio over the last year and are delighted to have fully deployed our initial tranche of committed capital ahead of schedule,” said Semeraro. “It is ground-breaking in its inclusion of a significant number of light helicopters and single-pilot fixed-wing firefighting aircraft – this has required creative and innovative approaches from everyone involved.”

LEVL has €75m ($82.33m) of committed equity funding to invest in sustainable aviation sectors like EMS, firefighting, SAR and other ESG- (environmental, social and governance) compliant transactions.

While governments are not necessarily issuing more tenders, Semeraro thinks more operators are discovering they can bring such contracts into their operations, particularly if they are already operating in such areas.

Ulf Hüttmeyer, executive vice president, EMP Structured Assets welcomed the “transaction of many firsts” and the closure of the debt financing with Investec. “The assets are providing critical services such as EMS, firefighting, and SAR – a sustainable investment in line with the EU taxonomy,” said Hüttmeyer. “Together with Investec we are looking forward to further develop the helicopter ESG financing segment and future transactions.”

Investec said the transaction is a further sign of Investec’s growing helicopter financing strategy. “This asset type has proven its versatility, providing essential work across a diversified user base that includes EMS, SAR, aerial policing, firefighting, offshore energy services and VIP transportation,” said John Shaw, associate, Aviation Finance, Investec.

“With more and more people living and working in regions vulnerable to extreme weather events such as storms, flooding and forest fires, SAR, EMS, firefighting and other related services have assumed an important role when it comes to the adoption of environmental, social and governance principles,” added Shaw.

Asked about rising interest rates, Semeraro, at Lobo Leasing, told us they were affecting the whole industry. Speaking yesterday, on the day the UK Bank of England raised interest rates from 4.5% to 5% and with Jerome Powell, chair of the US Federal Reserve, hinting at further rate rises, Semeraro said: “If we are able to optimise our structure and use creative solutions, we can minimise the impact of interest rates on our final product.” Key elements were Lobo Leasing’s ability to build strong relationships with operators “based on our understanding of both aviation and financing”, he added.

Investec Bank was advised by law firm Watson Farley & Williams (WFW). Jim Bell, co-head, Global Aviation Sector, WFW said: “We are pleased to have advised our long-standing and valued client Investec on these transactions and delighted to have supported Lobo and EMP in LEVL’s rapid growth”.

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