Creative finance – it's not all about money!

Innovative financing deals have helped governments use offset finance to provide aid to neighbouring allies in the form of support for national airlines, and some companies even get involved in assisting a nation to train its people in aviation management to ensure a next generation will be controlling airlines and airspace.

One company achieving all this and more is Blenheim Capital, which is establishing a regional head office in Bahrain and will be applying for a banking licence in the kingdom to support the growth of aerospace and defence investment throughout the Middle East and North Africa.

Blenheim has operated in the Gulf for more than 20 years providing offset advisory, transaction and education services to governments and corporations alike. Chief executive, Grant Rogan said: “With the global economy putting pressure on many important projects, Blenheim’s ability to work with governments and equipment manufacturers to provide innovative and efficient procurement, offset and financing structures is more important than ever to ensure the delivery of low-cost, long-term funds for strategic investments.”

Rogan said: “We act differently to the traditional larger investment and commercial banks. We work in partnership with government procurement policy, the vendors of assets and the ultimate operators. We leverage areas of opportunity that each one can make for an overall financial package that is less than it would cost the government if it went to the market.”

Blenheim is working on a number of aerospace-related finance deals and was heavily involved in the setting up of a new Kuwaiti-owned feeder airline and on training Arab nationals into the top-end aviation finance methods.

Rogan said: “Worldwide economic challenges are forcing our clients, both corporate and government, to rethink their approach to planning, acquiring and financing in the aerospace sector but we believe we have a range of solutions that can help deliver real economic value.”

The feeder airline start-up is Blenheim’s second offset transaction in Kuwait and meets all three strategic goals of the Kuwait Offset Programme (KOP).

The transaction involved support for a newly-created Kuwaiti aircraft leasing business, The Essence Group, in the form of transfer of aircraft assets by Raytheon Company and training for Kuwaiti government officials and business community members in airline strategic management, operations and related areas.

In line with KOP criteria to create high-value jobs and transfer valuable technology to Kuwait , Blenheim and Raytheon used offset funding to support the creation of the new Kuwaiti-owned business focused on the turboprop market to provide feeder aircraft for the GCC region’s distribution and passenger markets.

The new company, Essence, acquired four Beechcraft 1900C aircraft and entered into leases of those aircraft, which will operate across the region, serving existing and future aviation and distribution hubs for major national and international carriers.

As part of the transaction, Blenheim is also developing the business plan for Essence to provide a path for its continued expansion and growth. In addition, working with TASC aviation, Blenheim will deliver a training programme for up to 50 Kuwaiti nationals selected by the National Offset Company (NOC), which manages and administers the KOP, in line with knowledge transfer criteria.

The 10-month training programme is accredited by IATA and covers international business, aviation and legal issues.

Rogan said: “This transaction brings a unique combination of advisory services, drawing on Blenheim’s extensive aerospace background and corporate client assets to support the development of a sustainable aerospace sector in the country. Partnering with our corporate client, we were able to design an offset project that addressed the objectives desired by the Kuwaiti government, positioned the Kuwaiti start-up for success, and enabled our corporate client to generate significant offset credits against all three of the KOP’s strategic criteria and contribute to the economic development of its very important customer.”

Blenheim is firmly committed to the MENA region and Rogan said airlines in the region are looking differently at innovative financing.

“Equity is there but the challenge is the cost of debt and how they pull that together in a confined geographic area with competing airlines sharing the same ambitions. The OEMs are looking to be more proactive. Now doors of financial officers in the Gulf are open and people are much more receptive about trying to overcome some of the challenges.”