2023 Jul 28
Abu Dhabi, 28 July 2023: Waha Capital PJSC, an Abu Dhabi-listed investment management company (ADX: WAHA), reported a 221% increase in net profit year-on-year to AED 318 million for H1 2023 - equating to a return on equity of 12.6% - driven by healthy returns from its capital markets funds and higher fee income from managing third-party assets.
The company recorded total operating income of AED 500 million in the first six months of 2023, an increase of 123% from AED 224 million a year earlier. Income growth was primarily driven by the strong performance of Waha Investment, a wholly owned asset management subsidiary, as its emerging markets funds continued to deliver considerable returns and attract significant capital.
While the company has maintained strong cost discipline, operating expenses have increased due to performance-based incentive compensation accruals, which have risen in line with investment results. Higher benchmark interest rates have contributed to an increase in finance costs to AED 61 million from AED 54 million a year earlier.
For the second quarter, Waha Capital reported total income of AED 259 million and net profit of AED 170 million. Waha Capital’s total assets under management (AUM) stood at AED 9.0 billion at the end of June 2023, versus AED 6.3 billion a year earlier.
In May 2023, the company’s Board of Directors appointed Mr. Mohamed Hussain Al Nowais as Managing Director to lead the company through the next phase of its growth and development. Mr. Al Nowais, a Board member at Waha Capital since 2018, has previously held roles at Abu Dhabi Investment Authority (ADIA) and JPMorgan in New York. He is currently Managing Director of AMEA Power, Executive Director at AlNowais Investments Company, and a board member for Al Dhafra Insurance Company PSC and Abu Dhabi National Industrial Projects (ADNIP).
In line with Waha Capital's 2023 Corporate Social Responsibility (CSR) mandate, (as approved by shareholders at the company’s March 2023 annual general assembly), the company is committed to establishing an undergraduate scholarship program. The scholarship program will aim to offer eligible students, based in the United Arab Emirates, valuable educational assistance and opportunities for practical work experience within Waha Capital.
Waha Investment, the capital markets business that actively manages emerging markets funds, achieved AED 481 million in net investment returns in the first half of 2023, while fee income from managing third-party capital almost doubled year-on-year to AED 46 million. The business reported net profit of AED 458 million, compared to AED 113 million a year earlier.
The company’s flagship credit and equity funds produced positive returns in the face of continued volatility in global markets, continuing their exceptional multi-year track record of outperformance.
The Waha MENA Equity Fund achieved a total return of 10.5% versus 5.4% by its benchmark in the first six months of the year. The fund has delivered a cumulative return of 321.4% since its inception in January 2014, versus the S&P Pan Arab Composite Index’s return of 62.9%.
The Waha Emerging Markets Credit Fund, which pursues diverse long-short strategies in emerging markets fixed income, recorded a total return of 3.8%, compared to 4.1% for its benchmark. The fund has delivered a cumulative return of 189.2% since its inception in 2012, versus the JPMorgan EMBI Global Diversified Index return of 45.0%.
The Waha Islamic Income Fund delivered a total return of 3.78% (gross of fees) versus a benchmark return of 2.03%. The fund, which mainly invests in global sukuk and Shari’ah-compliant equities, has recorded a cumulative return of 19.4% (gross of fees) since its inception in August 2020, versus a -3.1% return by the Dow Jones Sukuk Index.
The Private Investments business continued to pursue its fully flexible, opportunistic global mandate and prudently deploy capital through its Global Opportunities multi-asset investment strategy. This portfolio generated net profit of AED 9 million in the second quarter of 2023, which helped to offset the mark-to-market losses incurred in the first quarter of 2023. Total assets under management in this portfolio were AED 511 million as of 30th June 2023.
The business continues to evaluate add-on opportunities through its Core Portfolio, which provides Waha Capital with exposure to private investments in the MENA region with established track records. The growth strategy of Waha Health, the company’s healthcare platform, is making progress and delivered a profit in the first half of 2023. Assets under management in this portfolio were AED 58 million at the end of the first six months of the year.
The Private Investments team continues to evaluate opportunities to monetise mature assets in order to maximise shareholder value. This portfolio was impacted in the first half of 2023 by mark-to-market losses on its shareholding in NESR. Total assets under management in this portfolio were AED 329 million as of 30th June 2023.
The business recorded a net loss of AED 27 million in the first half, versus net profit of AED 20 million year-on-year, predominantly due to fair value adjustments on its NESR investment.
Waha Land, a wholly-owned subsidiary that develops, owns, and operates light industrial real estate assets, recorded total revenue of AED 23 million in the first six months of 2023, driven by steady rental income.
The company has successfully developed and fully leased 17 warehouse buildings at the ALMARKAZ Industrial Development, providing approximately 362,000 sq.m. of industrial space. Waha Land is currently developing a further 136,000 sq.m of income-producing industrial properties at the site, in line with Abu Dhabi’s strategy to advance its industrial and logistics sectors.
Waleed Al Mokarrab Muhairi, Chairman of Waha Capital: "Waha Capital performed strongly in the first half of 2023, generating net profit of AED 318 million and a return on average equity of 12.6%.
Despite challenging macroeconomic conditions, the emerging markets funds managed by Waha Investment have delivered positive returns, further extending their multi-year track record of outperformance. This has resulted in inflows of AED 2.1 billion in third-party capital, which has contributed significantly to the company’s fee income.
The Private Investments business remains strong and stable as it pursues a flexible, opportunistic approach. The team’s global opportunities strategy and active management of Waha Capital’s direct investments have been instrumental in creating long-term value for stakeholders.
The Board of Directors recently appointed Mohamed Hussain Al Nowais as Managing Director and is continuing to work closely with the senior leadership team to implement a strategy for sustainable growth that will enhance shareholder value in the coming years."
Mohamed Hussain Al Nowais, Managing Director of Waha Capital: "I am pleased to report that Waha Capital achieved a solid performance in the first six months of this year, demonstrating the company’s resilience and financial position. Our investment teams have continued to create value while managing risk amid heightened uncertainty in global markets.
Our flagship emerging markets credit and equity funds have continued to deliver exceptional returns to the company and our clients. We are attracting a high level of interest among regional institutional investors and family offices, which is translating into substantial capital commitments. Assets under management now exceed US$2 billion, with third-party assets accounting for 57% of this total.
Meanwhile, the Private Investments team has applied a prudent approach to capital deployment through its Global Opportunities strategy, providing exposure to investments that are traditionally only within the domain of global institutional investors. We expect that market disruption caused by a higher rate environment will generate further attractive opportunities in the coming months.
Waha Land continues to generate steady income as it focuses on developing, leasing, and monetising land and built assets at ALMARKAZ.
The combination of our core businesses represents a highly differentiated proposition to stakeholders. We will continue to target long-term growth through diversified income streams in order to reinforce Waha Capital’s status as the premier asset management firm in the region."
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