HI Uplift: RIVE on track to raise €550m for its Transportation Assets Fund by 2025

Helicopters performing life-saving missions are attracting investment from RIVE’s RTAIF fund. 

Paris-based European investment company RIVE is on track to raise €550m ($602m) for its RIVE Transportation Assets Income Fund (RTAIF), by 2025. The fund, which invests heavily in helicopters, is aiming to raise €300m over the next 24 months after raising €250m ($274m) since its launch in June 2021.

Camille Brunel, partner at RIVE Private Investment tells Helicopter Investor the specialised transport industry must attract more financial players to help the sector meet its investment needs – particularly related to decarbonisation goals. Active in transport investment for the past 10 years, RIVE wanted to build an investment vehicle that would offer more long-term benefits.

“Historically investors were investing with us on a deal-by-deal basis,” says Brunel. “We realised that because we had built a group of investors and had built an investment ecosystem in which to invest, it would be easier and more effective if we pooled all the assets. So, it was a natural evolution from individual deals to a more streamlined, structured investment plan.”

The 25-year RTAIF fund operates under the EU’s Sustainable Finance Disclosure Regulation (SFDR) and invests in assets that meet fundamental needs, such as health and safety, plus decarbonising the transport sector. It’s managed throughout their life cycle: leasing, maintenance, technical and regulatory upgrades. So far, the fund has invested in more than 100 assets in over 15 OECD (Organisation for Economic Co-operation and Development) countries. Since its launch the fund has financed around €400m ($438m) of delivered assets.

RIVE chose to launch a general transportation fund rather than a pure aviation fund because it believes the sector is already well-served. It specifically wanted to specialise in sectors with fewer financial players and has a 10-year track record of transport investments spanning rail, maritime and aviation. “By investing in multiple segments of the transportation, we can build an informed view of how they interact and compete, enabling us to provide a good deal of insight to our investors,” says Brunel. Offering a diversified transport fund enables RIVE to make capital allocations across its investment portfolio, according to current market conditions. “Also, if you are a pure aviation fund, you cannot divest from aviation in 10 years’ time – should that prove necessary,” he adds.

A transportation investment fund was a good choice because, like energy and food, it serves a basic human need. Also, there are few competitor funds – at least in Europe, says RIVE. And there is significantly less bank funding now compared with 10 years ago, it adds.

RTAIF buys assets and offers operating leases. The model is cash generative offering a regular return on investment. “It’s different from a private equity fund where you buy an asset without any cash flow,” says Brunel. “On that basis, you perhaps sell the company after six years, hoping it’s worth more than you paid for it. With RTAIF, we are buying an asset and every month rentals are being paid and distributed to the investors, so it offers a positive cash generative yield and a strong risk protection.”

Specialist aviation accounts for about one third of the fund’s allocation. Helicopters account for about 80% of that total. But why rotorcraft? Funding helicopters helps to implement RIVE’s key aim of delivering environmental, social, and corporate governance (ESG) benefits, according to the investor. “ESG is quite central to our strategy,” says Brunel. “We have an ambition that about 80% of the RTAIF will be dedicated to sustainable development. Half of that is dedicated to investments that deliver environmental benefits such as rail transport and half is dedicated to investment that have a social impact.”

This includes helicopters flying life-saving missions, such as health and emergency medical services, search and rescue and fire-fighting missions. “The key driver is the social value helicopter missions bring to our portfolio and the lives they help to save in various scenarios.” And with much of the ageing global helicopter fleet in need of replacement, the replacement cycle is turning. “There’s clearly a big investment to be done by the helicopter operators and financiers to renew the fleet and to extend the use of helicopters on these life-saving missions,” says Brunel. But decisions about acquiring new or pre-owned helicopters are not becoming any easier with rising inflation, higher new helicopter prices, squeezed margins and tightening budgets, he acknowledges.

Meanwhile, the remaining 20% of the fund’s allocation is directed to investment in fixed-wing projects. For example, last October, RIVE acquired a 50% equity stake in Logix.Aero, a leading player in short-term aircraft engine leasing and aeronautical parts management. Strengthening a 10-year partnership, investment will provide Logix.Aero with extra capital for engine acquisitions.

But RIVE has no plans to boost the proportion of its investments in fixed-wing projects or to invest in commercial aviation. “We have to think 20 years from now,” says Brunel. “I’m not sure that investing massively in commercial aviation is the right move to make for our investors. We think there’s much more value to the helicopter segment.” 

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