This article first appeared in The Edge Malaysia Weekly on March 13, 2023 - March 19, 2023

WESTSTAR Aviation Services Sdn Bhd (WAS) had grown its fleet to 38 helicopters from just 11 in the decade that global private equity firm KKR & Co Inc was invested in the company.

On March 4, KKR exited WAS for an undisclosed amount, ending a 10-year partnership with the company’s founder and Weststar Group managing director Tan Sri Syed Azman Syed Ibrahim. The private equity firm’s investment cost was RM642 million for a 40% stake in WAS back in 2013.

In an exclusive interview with The Edge, Syed Azman says KKR had contributed to the growth of WAS but now, he intends to take the company to a bigger stage, focusing on Africa and South America, where oil and gas (O&G) exploration and production is growing exponentially, especially in the former, with new major oil fields being discovered and developed.

“My plan is to expand the international business globally. When KKR came, we were only doing business in Malaysia. Today, we are in Indonesia, Timor Leste, Saudi Arabia, Gabon, Congo, Mauritania, Namibia and Equatorial Guinea,” Syed Azman, 63, tells The Edge at his office in Wangsa Maju, Kuala Lumpur.

With 38 helicopters in its fleet, WAS is Southeast Asia’s largest offshore helicopter operator, serving major O&G companies in the region. It is also one of the biggest helicopter operators in the world.

With its focus on Africa and South America over the next 10 to 20 years, WAS plans to almost double its fleet to between 50 and 60 helicopters, says Syed Azman.

WAS will not be expanding in Africa on its own. In fact, the company has already announced its new strategic partnership with Helicopter & Cooperation SAS (H&C) to expand the global reach of its European affliate, Weststar NDD Srl (WNDD).

H&C is a joint venture between Paris-based Avico Group and Africa-headquartered Weststar Aviation. WNDD is the operating company for WAS’ businesses in Europe and Africa, mainly based in Equatorial Guinea, Congo, Gabon, Namibia and Mauritania.

“As Africa shows promising growth, we hope to synergise the strengths of the three companies and further expand our presence in Africa through the partnership. Namibia, in particular, has the potential to become a major O&G producer in the continent, which will provide a huge opportunity for WAS,” says Syed Azman.

In February 2022, French energy giant TotalEnergies SE announced a major discovery in the region. The Venus 1-X well in the PEL-56 licence off the Atlantic coast of Namibia could hold at least five billion barrels of oil equivalent, according to TotalEnergies.

Then on March 6, 2023, Shell plc and QatarEnergy announced a new oil discovery in an exploration well off Namibia, in the Jonker-1X deepwater exploration well in the PEL-39 licence, which is located 270km offshore.

In South America, one of its major clients has invited WAS to participate in a tender to operate offshore helicopters for its operations in Suriname and French Guiana, says Syed Azman.

Besides expanding internationally, WAS is also diversifying into the leasing of helicopters to governments, says Syed Azman. This includes leasing helicopters to the Ministry of Defence, as well as to emergency medical services, especially in South America.

WAS has already supplied four Leonardo (formerly known as AgustaWestland) AW139 medium-lift helicopters to the Royal Malaysian Air Force (RMAF), under a government-operated, contractor-owned and maintained (GOCOM) contract.

According to news reports, the Ministry of Defence had issued another tender for the supply of four medium-lift helicopters for the use of the Malaysian Army’s aviation unit.

Under the GOCOM contract, the government only pays an annual lease to the contractor, which is responsible for procuring, supplying and maintaining the helicopters.

The retirement of the entire Sikorsky S-61 A-4 “Nuri” helicopters back in January 2020 had left a gap in the RMAF’s capabilities. The 40 Nuri helicopters had been the backbone of the RMAF’s utility and search and rescue (SAR) operations since 1967.

The government had planned to procure another 24 utility and SAR helicopters to complete the replacement for the Nuri. However, it is unclear whether these helicopters will be under the GOCOM contract or a direct procurement by the government.

Apart from the leased AW138, the RMAF also operates 12 Airbus H225M (formerly known as Eurocopter EC725) for utility and SAR operations. The additional 24 helicopters will bring its fleet to 40.

Syed Azman says the GOCOM contract is not limited to the Ministry of Defence as it can also be replicated for the Royal Malaysian Police, the Fire Department and the Malaysian Maritime Enforcement Agency.

Besides the diversification into defence contracts, WAS has also been diversifying into corporate VIP and VVIP transport services, emergency medical evacuation services, powerline and pipeline inspections, and timber surveys.

This means the group’s revenue will not be too concentrated in the O&G industry in the future, says Syed Azman.

To recap, KKR acquired a 40% stake in WAS for about RM642 million in 2013. While Syed Azman is tight-lipped on the value of the 40% equity interest, it is believed that Weststar Group paid RM1.25 billion to buy back the stake from the private equity firm. Based on the company’s financial reports filed with the Companies Commission of Malaysia, WAS made a total net profit of RM225.38 million from FY2017 to FY2021 ended Dec 31, with the highest annual profit of RM93.7 million in 2017. In FY2020, the company declared a net dividend payout of RM201.78 million, according to CCM data.

At end-FY2021, WAS had RM2.3 billion worth of assets, with its current assets making up RM526.83 million, and RM1.67 billion in liabilities. Its net worth stood at RM646.09 million.

Based on the RM1.25 billion believed to have been paid by Weststar Group for the 40% stake in WAS, the company could be worth about RM3.13 billion. In 2013, when KKR acquired the stake for RM642 million, WAS was valued at RM1.61 billion.

According to Syed Azman, WAS registered revenue of RM680 million and profit after tax (PAT) of about RM20 million to RM25 million for FY2022. This year, the company is expected to reach a revenue of RM890 million and a projected PAT of about RM50 million. The size and profitability of WAS have made the company a prime candidate to be listed on Bursa Malaysia, and Syed Azman had in the past tried to list the company. In fact, when KKR invested in WAS, its planned exit was to be through a public listing.

However, since WAS’ fortunes are tied to the O&G sector, crude oil prices are a major factor in the decision whether or not to list the company. In 2015, Syed Azman initiated efforts to list the company, but the collapse in oil prices thwarted the attempt.

“How to list the company? We wanted to list in 2015, but the stock market crashed. Oil prices plummeted. So, what kind of valuation could we get, when we are interrelated with the O&G industry? Our clients are all O&G companies. So, we had to postpone,” he says.

The political instability that Malaysia had been through since 2018 could be another reason for the postponement of the listing, as the capital market was in the doldrums.

Syed Azman says that while he has always believed that WAS should be listed as it grows bigger, he is not in a hurry to do so. That is because the reason for listing the company is to take its growth to the next level, rather than because he or other investors need to cash out.

While a public listing of WAS remains a possibility for now, Weststar Group has attracted interest from investors wanting a slice of the offshore helicopter operator, says Syed Azman. However, nothing has been firmed up yet, he adds.

Now that Syed Azman has taken full control of WAS, the company is seen as a prime candidate for listing, whether in Malaysia or elsewhere. The question is: Will he do it?

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.