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By Stephen Eisenhammer
LONDON, Feb 3 (Reuters) - After running one of the world's biggest and most controversial private military groups, Blackwater founder Erik Prince is starting a new venture providing logistics for oil and mining companies in remote and dangerous parts of Africa.
China is increasingly looking to Africa to meet its ever growing demand for natural resources. Trade between the two reached an estimated $200 billion this year. With 85 percent of Chinese imports from the continent being oil or minerals, Prince sees an opportunity.
He wants to use his experience of getting people and equipment in and out of remote places, where there is little or no infrastructure, to help companies looking to exploit abundant natural resources in places like Sudan or Somalia.
The 44-year-old former U.S. Navy Seal became chairman of Frontier Services Group (FSG) this month, a Hong Kong-listed company of which China's state-backed investment fund Citic owns 15 percent. Prince himself has share options in the firm that would convert to a 9 percent stake.
The appointment is a remarkable turn-around for a man vilified by many as a war-profiteer with blood on his hands. Blackwater, which provided security for the U.S. government in Iraq and Afghanistan and grew from a $6 million investment into a billion dollar business, gained notoriety after its guards were accused of killing 14 Iraqi civilians in 2007.
Iraq revoked Blackwater's licence.
In the political backlash that followed, the U.S. pulled its contracts and the Blackwater empire which had been heavily reliant on government work, began to crumble. Accusations of tax evasion, illegal weapons and more deaths followed.
Blackwater denied wrongdoing.
The firm changed its name to Xe Services as Prince resigned as chief executive in 2009. He sold the firm in 2010, after which it changed its name again, this time to Academi.
Prince seeks both to emphasize the similar skills and people involved in providing logistics in Africa with the work Blackwater did, while also distancing himself from the violence and the politics.
Planes are Prince's starting point. FSG already owns a few planes and airstrip in Kenya and is on the hunt for acquisitions this year to build a pan-African network of aircraft.
"We're starting in the aviation space because I believe if you're going to operate in Africa you've got to be able to move by air. Commercial airlines are limited, roads get washed out," he told Reuters in an interview.
"If you're drilling in some remote area and your rig goes down and you need a new part for your rig; that's 10s if not 100s of thousands of dollars a day. How do you get that thing quickly and with no excuses?"
Prince, who has flown since he was 16, said he realised the potential of operating a safe and reliable air service a year ago when the aircraft which was flying him back from a mine site in Burkina Faso nearly crashed.
"A scary moment but also one of clarity," he said.
The planes will start by transporting people and cargo before moving into pipeline and route surveillance, and mapping. Trucking and barging capability are the next steps. Aviation was an important part of the Blackwater business, operating 70 aircraft.
Finding the people to fly into and out of remote and dangerous parts of Africa is not an issue, Prince asserts, drawing on some of the people who used to work at Blackwater.
"I know a lot of people in the aviation business, particularly ones who will fly to places where your boots get dirty when you get out of the airplane," he said.
Since selling Blackwater in 2010 Prince has been working as a fund manager for his private equity firm, Frontier Resource Group (FRG), with investments in a refinery in South Sudan and a mapping company for early stage oil and mineral exploration.
This gave him a taste for the growing natural resources story, and a sense that there was opportunity for a much bigger player than the small projects he was investing in.
"As I was moving around Asia trying to raise money for this private equity fund, a lot of the big investors said, 'It's great that you want to be a fund manager, but what we really need you to do is to build a business like you had before. Not a defense services business, but one that can help us operate in the challenging areas and take away a lot of the uncertainty'."
It is still very early days for the new venture, and Prince would not be drawn on the specific customers he is courting or give revenue forecasts. He said he was targeting major oil and mining companies, as well as infrastructure groups.
So is this Blackwater part 2?
"It's similar," Prince replied. "But we're not here to serve government or defense projects, we're not there to build their police force, nothing like that. We're there to move an NGO, an advanced seismic crew or a drilling crew from a mining company, or if an oil operation needs their camp supported and built." (Editing by Ralph Boulton)
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