UPDATE 2-KKR's Malaysia deal bets on take off of helicopter services

Thu Oct 10, 2013 1:52am EDT

* Southeast Asia's oil and gas services sector rapidly expanding

* Weststar Aviation hopes to list next year, targeting around 2 bln ringgit deal -source

By Yantoultra Ngui and Stephen Aldred

KUALA LUMPUR/HONG KONG, Oct 10 (Reuters) - A $200 million agreement by KKR & Co LP to buy a stake in Weststar Aviation Services marks the firm's first Malaysia deal and places a bet on the business of chartering helicopter flights for the region's oil and gas sector.

In signing the pact on Thursday at a ceremony in Kuala Lumpur, KKR becomes one of several investors planning to put money into companies specialising in niche areas of the oilfield service market. With the promise of huge contracts from oil majors operating across Southeast Asia, the aviation services sector has become one of the region's fastest growing industries.

KKR said it bought a "substantial minority stake" in Weststar Group unit Weststar Aviation Services, which over the past decade has become Southeast Asia's largest provider of helicopter services with a fleet of more than 40 aircraft.

KKR did not disclose further details of the deal. People familiar with the matter said the stake is around 30 percent of the company.

"With KKR, we have a value-added partner who shares our vision of growing the company into one of the world's leading offshore helicopter services companies," said Weststar Group Managing Director Syed Azman Syed Ibrahim at a press conference called to announce the deal.

The deal would be KKR's fourth Asia-Pacific investment announced in the past three weeks, in which the firm put more than $1 billion of equity to use, a person familiar with the matter told Reuters earlier.

Syed Azman also said Weststar Aviation aims to list on the stock exchange, but declined to give a time frame.

An initial public offering could come as early as next year, with a size of 2 billion Malaysian ringgit ($625.00 million) and market value 6 billion ringgit, said a banking source with direct knowledge of the matter.

Weststar Aviation's customers include Exxon Mobil Corp and Petronas, from which it won a 4.2 billion ringgit contract in 2011. The company has two arms, General Aviation and Oil & Gas Aviation, with General comprising of private jet charter flights.

A Reuters survey of 20 Malaysia- and Singapore-listed oil and gas services companies showed their assets grew by 30 percent last year to $8.4 billion.

New York-based KKR has announced seven deals in Asia this year, investing in companies in such countries as Vietnam, India, China and Japan.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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