Waha Capital earnings plunge amid market volatility and weaker Aercap income
Waha Capital said yesterday that its third-quarter profit fell 61 per cent as volatility in global securities weighed on gains at its capital markets division and income from its stake in the New York-listed aircraft leasing company AerCap declined during the quarter.
Net income dropped to Dh117.9 million in the three months to the end of September, from Dh301.2m in the same period last year after income from capital market transactions plunged to Dh28.8m from Dh110.8m, the company said.
AerCap, which Waha Capital has a 13.6 per cent stake in, this month posted a drop in third-quarter earnings to US$272.8m, from $353m in the same period last year, according to Bloomberg data.
Waha Capital’s chairman remained upbeat despite the setbacks and stormy market conditions, noting that Waha Capital’s equity portfolio was still up 9.8 per cent year-to-date and its fixed-income portfolio had gained 7.6 per cent this year.
“Waha Capital is performing very well against a difficult global macroeconomic and markets backdrop,” said Hussain Al Nowais, its chairman.
“We are benefiting from an increasingly diversified portfolio, which includes investments in solid, well managed companies.
“The company has a strong balance sheet and will invest further in some of the fastest-growing sectors of the regional economy.”
Adjusted net profit for the first nine months of 2015, after taking out net non-recurring items, increased 31 per cent to Dh466.9m, Waha Capital said.
Global stocks plummeted in the third quarter amid increasing speculation that the US Federal Reserve will begin unwinding its policy of low interest rates and start raising interest rates in December. That has prompted investor fears that the seven years of cheap money may be coming to an end. The MSCI All Country World Index, a benchmark of global equities, fell 10 per cent in the third quarter before making a partial recovery at the start of the fourth quarter.
Salem Al Noaimi, Waha Capital’s chief executive and managing director, said its capital markets division would market its public equities and credit funds in the coming weeks as part of its push to generate fees.
Waha Capital has been considering new investment opportunities this year as it looks to invest Dh4 billion in healthcare, education, energy and infrastructure.
Shareholders have been eagerly waiting to hear from Waha Capital on what it will be investing its funds in.
Waha Capital expected to complete two private equity deals in the Middle East and North Africa with deal values of between $30m and $100m, Hani Ramadan, the managing director of principal investments at Waha Capital, told Bloomberg News on Tuesday.
“Next few years will be good for investments,” he said.
“You can feel that people are getting more realistic about valuations. We are currently more interested in investing than in selling our stakes in companies.”
Waha Capital has yet to comment on plans reportedly being made by Dunia Finance shareholders to sell their stakes. They include Mubadala Development, Temasek Holdings, a Singapore sovereign wealth fund, and A A Almoosa Enterprises, a local family-owned business. Waha Capital owns a 25 per cent stake in Dunia Finance.
The sale might attract a bidding war from banks seeking to tap high-yielding individual customers, according to analysts. Analysts said one shareholder might buy the others out, or the firm might be sold in an initial public offering.