AerCap boosts Waha Capital's Q3 profit by 181%

Abu Dhabi-based investment firm Waha Capital net profit jumped six-fold to Dh1.6 billion for the first nine months of 2014 compared to Dh231 million in the same period in 2013, largely due to a one-off gain recorded in the second quarter as the company unlocked part of the value of its stake in AerCap.

For the third quarter of 2014, the company recorded 181 per cent growth in Q3 net profit to Dh301.2m up from Dh107.1m a year earlier, driven by strong contributions from the company’s stakes in AerCap Holdings and Dunia Finance.

In the third quarter, AerCap again made a strong contribution to Waha Capital’s earnings, as the New York-listed company recorded a 117.6 per cent rise in earnings per share from a year earlier, due to its acquisition in May of International Lease Finance Corporation (ILFC). The acquisition has created the world’s largest independent aircraft leasing company.

During the quarter, Waha Capital also entered into a hedging and financing transaction, as part of the company’s strategy to de-risk and to lower its cost of capital. This transaction involved hedging half of the company’s exposure to AerCap and raising approximately Dh2.1b ($575m), which will be used to partially repay existing debt and to fund new investment opportunities.

“The company has significant capital at its disposal to fund future investments,” said Salem Rashid Al Noaimi, Chief Executive Officer and Managing Director of Waha Capital. “We intend to develop our platforms in the high-potential areas of energy and healthcare in the coming years, building scale organically and through select acquisitions.”

Waha Capital announced in September its intention to implement a share buy-back programme for up to 10 per cent of outstanding shares to allow its shareholders to directly benefit from the company’s continued profit generation. The programme was approved by the UAE Securities and Commodities Authority on October 19, 2014.

The firm’s assets stood at Dh9.3b as of the end of the third quarter compared with Dh5.2b as at December 31, 2013. This was mainly due to the proceeds resulting from the hedging and financing transaction on half of the company’s shares in Aercap, followed by strong performance of Waha Capital’s portfolio companies and increase in public capital markets investments.

Investment summary

AerCap, in which Waha Capital owns a 14.1 per cent stake, recorded a 117.6 per cent year-on-year rise in earnings per share in the third quarter, with the increase largely attributable to the company’s acquisition of ILFC.

As of September 30, 2014, the company owned, managed or was under contract to purchase a total of 1,676 aircraft, with an order book of over $25b.

During the third quarter, AerCap signed lease agreements for 84 aircraft, delivered 26 aircraft under contracted lease agreements, purchased nine new aircraft, and closed the sale and part-out transactions of 15 aircraft.

Dunia Finance, in which Waha Capital owns a 25 per cent stake, said loan book grew 34 per cent during nine-month period to Dh1.4 billion, and customer deposits were up by 40 per cent to Dh722m. The company had a customer base of 157,100 as at September 30, 2014.

Waha Capital booked a full quarter’s earnings contribution from National Petroleum Services (NPS) for the first time in the third quarter of this year, following its acquisition of a 20.56 per cent stake in the company in June 2014.

During the third quarter, NPS continued to position itself for long-term growth, particularly in emerging markets, and to make significant enhancements to the quality of its services. The company secured contracts worth Dh241.9m during the third quarter, taking current contracts-in-progress to Dh2,706.8m. Additionally, NPS invested Dh33.7m in fixed assets in the third quarter, bringing the year to date additions up to Dh131m.

The capital markets division at Waha Capital generated Dh235m of revenue during the first nine months of the year.

Waha Capital said it’s working to establish a second regional infrastructure fund.

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