New strategy will add value at Waha Capital as turnaround continues

ABU DHABI, 8 August 2019 – Waha Capital PJSC, a leading investment company in Abu Dhabi (ADX: WAHA), has today announced its financial results for the first half of 2019. The company’s Asset Management business recorded a solid income performance, while its Private Investments unit recorded a loss, mainly due to provisions and one-off items.

Waha Capital is currently pursuing a new strategy to deliver a turnaround and set the company on a path of sustainable growth in the future. As part of this strategy, the company announced in July that a new chief executive, Amr Al Menhali will join Waha Capital in September 2019, bringing with him a track record of success after nearly two decades at leading UAE banks. The business has strong institutional backing and together with Waha Capital Chairman, H.E. Waleed Mokarrab Al Muhairi, the turnaround strategy is being led to further progress the development of the business.

Waha Capital has demonstrated robust performance over recent years and has established a well-balanced portfolio of assets across several growth sectors. A realigned strategy will focus on further developing and diversifying the company’s investments that deliver long-term value to shareholders.

The company will be looking to create additional value from its current roster of investments, while seeking attractive new opportunities globally, and building a solid asset management offering for its third-party institutional investors.

FINANCIAL HIGHLIGHTS

H1 2019 Financial Highlights

• Total income from Asset Management increased 64% year-on-year to AED 395 million
• Total general and admin expenses reduced by 18% year-on-year to AED 107.2 million
• Total impairments and loss on disposal aggregated to AED 363 million
• Net loss of AED 182.2 million

Waha Capital’s Asset Management business, which manages emerging market funds, recorded a net profit of AED 239.2 million in the first half. The company’s credit and equity funds, which have consistently outperformed key indices over several years, continued to deliver strong returns, while assets under management have also increased to AED 2.9 billion.

The company’s Private Investments business, which invests in diverse sectors including aviation, fin-tech, energy, healthcare and financial services, recorded a net loss of 351.8 million in the six-month period. This was largely due to a provision of AED 209.4 million following a reassessment of the value of AerCap Holding’s recoverable amount and a loss on disposal of AED 153.6 million following settlement of 6 million AerCap shares.

The Private Investments division manages of diversified portfolio of high-potential investments that are well-positioned to benefit from regional and global macro-economic trends. The recovery in oil prices in the last year is driving investment in the energy sector to the benefit of oil and gas services firms such as Petronash and Nasdaq-listed National Energy Services Reunited Corp (NESR). Meanwhile the roll-out of mandatory health insurance in the UAE is supporting the further growth of Anglo Arabian Healthcare, and Fintech firm Channel VAS continues to tap increased mobile penetration and demand for micro finance in Africa and Asia.

Waha Capital recorded a net loss of AED 182.2 million for the first half of 2019. For the second quarter, the company reported a net loss of AED 124.4 million.

Waleed Al Mokarrab Al Muhairi, Chairman of Waha Capital, said: “Thanks to a well-established business platform, a robust balance sheet and institutional backing, Waha Capital is well placed to play a leading role in the regional investment landscape. The company’s Asset Management division continues to demonstrate an impressive track record of outperformance, and our strategy is focused on building assets under management by leveraging our networks to attract third party investors.

“The Principal Investments division has invested in high potential businesses in the company’s areas of expertise and is focused on active value creation. While financial results in recent quarters have been impacted by losses associated with the collar hedge on the stake in AerCap Holdings, I am pleased that the company has implemented a strategy to deliver a rapid turnaround, returning to a path of sustainable growth. Under the leadership of Amr Al Menhali, who joins as Chief Executive Officer in September, Waha Capital will be fully focused on producing an attractive return on equity in the coming years.”

Mohamed Al Nowais, Managing Director of Waha Capital said: “Waha Capital’s first-half results show continued growth of our Asset Management business, with strong profitability metrics, while our Principal Investments unit was impacted by one-off losses. Higher financing costs also weighed on the company’s bottom line.  

“Waha Capital remains highly resilient due to the diversification of its assets, and the management team is fully focused on creating value across the business, by taking an active approach to guide portfolio companies in their growth, and by building a strong asset management proposition. “ 

ASSET MANAGEMENT HIGHLIGHTS

The year-to-date returns of the funds, attributable to owners, as of the end of June was 15.47% for the MENA Equity Fund, 18.26% for the MENA Value Fund, and 10.53% for the CEEMEA Credit Fund. Total assets under management increased to AED 2.9 billion at the end of the first half, from AED 2.5 billion at the end of 2018.

Waha Capital’s flagship funds have been recognised for their strong performance. The Waha CEEMEA Credit Fund, which delivered a 136.8% between 2012 and 2018, also won the major emerging markets accolade at the recent HFM European Hedge Fund Performance Awards in London.

Meanwhile, the Waha MENA Equity Fund was listed by the Wall Street Journal in the top 60 hedge funds globally, ranked by its performance over the last five years. The fund delivered a total return of 121.4 percent between 2014 and the end of 2018. 

PRIVATE INVESTMENTS HIGHLIGHTS

AerCap

In the first six months of 2019, Waha Capital disposed of 6 million shares in AerCap for a consideration of AED 1,017 million, while the company did not participate in a share buyback programme carried out by the New York-listed aircraft-leasing firm. Consequently, Waha Capital’s stake in AerCap stood at 8.1% at the end of June 2019, down from 12.0% at the end of 2018.

Petronash

Petronash, a leading provider of modular wellsite packages, chemical injection system and wellhead control system to the oil and gas industry, recorded first-half revenue of AED 267.1 million. Waha Capital acquired a 35% stake in Petronash in August 2018 for an upfront consideration of AED 322.8 million and an estimated deferred consideration of AED 73.8 million, with an option to increase its stake to 50%. 

Channel VAS

Dubai-based fintech firm Channel VAS, in which Waha Capital holds a 19.5% stake, reported a 22.9% year-on-year rise for the first half of 2019, achieving revenue worth AED 112.8 million. The company, which is a premium provider of fintech solutions for mobile network operators, is present in over 25 countries, with access to over 500 million mobile subscribers.

Anglo Arabian Healthcare

Anglo Arabian Healthcare, in which Waha Capital owns a 95% stake, achieved a revenue of AED 153.6 million in the first half of 2019, representing an 18.7% year-on-year increase in revenue. The company owns and operates 27 business assets, employing more than 900 people and serving over 800,000 patients.