Shares in Waha Capital have soared more than 12 per cent in the past three days on the back of much higher trading volumes, marking one of the sharpest share gains among heavily traded stocks this year. The state-backed company is raising US$1.5 billion (Dh5.51bn) in bonds on behalf of the UAE Armed Forces for the acquisition of military aircraft from Boeing and Lockheed Martin, and market speculation on the share gains has centred on the prospects of Waha nearing the completion of its military aircraft financing deal.
Officials from Waha, however, have declined to comment on the deal, or the recent stock gains. "Our clients are asking what is going on," said Alfred Fayek, the managing director at EFG-Hermes brokerage based in Dubai. "No one seems to know anything at all." Waha shares have been the most heavily traded on the Abu Dhabi Securities Exchange over the past two days. The recent volatility of the shares follow other unexplained runs on local equities that analysts attribute to the fact that retail investors, rather than institutional buyers, form the bulk of the investing community at the moment.
This has driven shares up and down sharply in recent months, often due to market rumours rather than any aspect of a company's fundamentals. "Retail investors now take a larger role in the daily market activities," said Mr Fayek. Last month, Dana Gas shares experienced strong selling pressure that drove the price downward by 6 per cent without any concrete news from the company. In the same month, Deyaar surged more than 13 per cent in one day.
Waha shares are up more than 30 per cent in the past month. The previous spike was sparked by the company's announcement that a subsidiary in the Netherlands, Waha Aerospace, announced plans to raise bonds worth $1.5bn to be guaranteed by the Abu Dhabi Government. The bonds are to be used to help fund the C-17 and C-130 deals. Waha Capital was created as Oasis Leasing in 1997 as an aircraft leasing firm and counted BAE Systems and Abu Dhabi Investment Company as shareholders. It rebranded itself in 2007, forming a joint venture with Blenheim Capital Services and taking on the Waha brand.
The company has since expanded its leasing portfolio to include shipping and district cooling as well as increasing its financial services capabilities. In February last year, Waha was mandated to arrange the financing for 18 military aircraft for the UAE Air Force, comprising six Boeing C-17s and 12 Lockheed Martin C-130s, worth an estimated Dh12bn. In January, it closed the first tranche of financing for C-17 aircraft totalling Dh6.2bn, syndicated by eight banks.
A second tranche of funding for the C-130s is dependant on the Armed Forces finalising the contract with Lockheed Martin. Salem al Noaimi, the chief executive of Waha Capital, said in March he hoped the company would secure "at least one or two acquisitions" by the end of the year.