Date
22 November 2017
Prince testifies at a US House of Representatives hearing in 2007 over actions by Blackwater employees in Iraq. Picture: Bloomberg
Prince testifies at a US House of Representatives hearing in 2007 over actions by Blackwater employees in Iraq. Picture: Bloomberg

Prince of Blackwater saddles up for Sino-African frontier

Erik Prince rose to public prominence as the lord of Blackwater, a controversial defense contractor that came under fierce attack over its operations in Iraq. Today the former US Navy SEAL is pitching his new company as a logistics knight in shining armor to Chinese clients in Africa. It’s a role Prince sees as less of a gun-toting Rambo and more of a Bear Grylls-style man against wild.  

“We are ‘Company vs African Wild’,” Prince told the Hong Kong Economic Journal’s EJ Insight in an exclusive interview earlier this month after being appointed chairman of DVN (Holdings) Ltd. (00500.HK), which was renamed Frontier Services Group Ltd. on Jan. 10. 

“Our mission is to provide support and services to major drilling, mining and road-building companies that are going to do business in Africa.”

Whether it’s flying visitors into remote mine sites, transporting service crew, setting up camp or ferrying basic supplies, Frontier’s task is to make it happen safely, on time and within budget for its clients.

“The ability to move stuff around is important,” he said.

Eastern promise

DVN was previously controlled by Hong Kong tycoon Johnson Ko and the state-owned CITIC Group. Prince sold his 49 percent stake in Kenya-based aviation firm Kijipwa Aviation to DVN for US$3 million and has an option to own up to 205.12 million new shares in the Hong Kong-listed company, according to a filing to Hong Kong stock exchange on Nov. 23. He was granted another option to subscribe for 102.56 million new shares in DVN and became the company’s largest shareholder.

The links to China are not incidental; Chinese companies represent a big potential client base as they extend their reach into Africa. Since 2009, China has replaced the United States as the continent’s biggest trading partner. In 2012, Sino-African trade came in at US$198.49 billion, up 21.4 percent from a year earlier, according to China’s Ministry of Commerce. That compares with 6.2 percent growth in China’s total external trade.

In the decade to 2012, Chinese investors plowed US$22 billion into African projects, three times the amount of direct investment from Japan. But the US, the United Kingdom and France remain the top three investors in the continent.

Those numbers are why Prince will be spending the next few months touring Beijing, Shanghai and Hong Kong to drum up business with China’s state-owned enterprises. Frontier Services, he insists, can help Chinese clients deploy their budgets more efficiently and de-risk their projects. The payoffs for Prince and his backers could be huge.

Prince said Chinese investment is streaming into Africa and the logistics costs of realizing all those investments could be anywhere upwards of tens of billions of dollars.

He stressed that Frontier is not a security provider, but its services will involve some security elements. 

“When you build your projects, you have to ship hundreds of million dollars of equipment there,” he said. “We will make sure that they won’t get stolen and prevent your pipelines from getting tapped or your mines from being ripped off.

“Problems of criminality, political instability, dry or wet season, washed-out bridges and diseases can get in your way in Africa. We can send you the right person to solve the problem.

“There are always some kind of brush-fire wars popping up in countries like Nigeria, Mali, Liberia and Somali but they are not some state-to-state wars … it doesn’t take that much for us to mitigate those risks.”

Prince said he will train some local security guards in Africa, instead using foreigners, and the company could, if necessary, rescue kidnapped staff of clients. Prince is also considering starting some specialty services, such as a fishery protection program to help legal fishermen do business and governments collect tax.

Brush with death

One thing Prince won’t be doing is buying into the aviation company that nearly killed him and a billionaire potential investor onboard a flight in Africa last year.

“I was nearly killed in a plane accident. We were looking for a potential mine site. It was a hot day. We flew out there and landed on the remote place,” he said.

“When the airplane was taking off, it suddenly went down again. The pilot kept the power on because there was no way to get it stopped. It got off the ground and folded the landing gear … Finally we missed the bushes at the end of the runway by about one meter.”

That’s why the company is looking into acquiring some aviation service providers, Prince said. Frontier has already bought Egypt Aviation and built it into its aviation logistics hub for East Africa. The next step is to expand its continental footprint with another acquisition.

“We are in a search mode right now. We search for companies that can give us good regional and continental reach. We have a few targets,” Prince said, adding that he expects high customer demand.

“If you are a chief executive officer of a mining company getting to the next country in Africa through commercial vehicles, you have to go back to Paris and come back down again.”

Born in 1969, Prince founded Blackwater in 1997 to provide military training and security services. A decade later, he was called to account in front of US legislators over the deaths of Iraqi civilians, including 17 people in one incident. In 2010, he sold the business, which was then renamed Academi. Last year, Prince responded to his critics with a memoir Civilian Warriors – The Inside Story of Blackwater and the Unsung Heroes of the War of Terror.

–Contact the report at [email protected]

SK

Frontier Services Group deputy chairman Johnson Ko (right) with Erik Prince. Photo: HKEJ


Frontier Services Group chairman Erik Prince is promoting his company to Chinese investors in Africa. Photo: HKEJ


Frontier Services offers support to oil companies operating Africa. Photo: Bloomberg


Kijipwa Aviation, a 49%-owned unit of Frontier Services Group, provides air services in East Africa. Photo: Kijipwa Aviation


Chief reporter at EJ Insight

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