AerCap acquisition puts Waha Capital in the pilot’s seat

Waha Capital becomes the second largest shareholder in the world's largest independent aircraft leasing company after AerCap Holdings, the New York-listed company in which it holds a stake, completed the acquisition of a competitor.

AerCap Holdings, the New York-listed company in which the Abu Dhabi investment firm Waha Capital is a significant shareholder, has completed the US$7.6 billion acquisition of ILFC, the aircraft leasing arm of American International Group.

The deal makes Waha Capital the second largest shareholder in the combined entity, which becomes the world’s leading independent aircraft leasing company.

Waha Capital previously held a 26.2 per cent stake in AerCap. It will hold the same number of shares in the new entity but its larger size will mean the holding will be diluted to a 14.1 per cent stake.

“As a long-term partner of AerCap, we see significant value being created by the combined company through the dramatic increase in scale and earnings in an industry with strong growth prospects in the coming years,” said Salem Rashid Al Noaimi, the chief executive and managing director of Waha Capital, which also has investments in financial services, health care, oil and gas and property.

AerCap first announced in December its intent to acquire International Lease Finance Corporation from AIG for US$5.4bn, including $3bn in cash and 97.6 million shares in AerCap.

The value of the deal has since climbed after AerCap’s shares almost doubled. The takeover means AerCap now manages a fleet of more than 1,300 aircraft valued at about $45bn. It becomes a closer competitor to General Electric’s Gecas subsidiary, the industry leader.

“AerCap is poised to become one of the two premier global aircraft-leasing franchises,” said Gary Liebowitz, an aerospace analyst with the US bank Wells Fargo.

AerCap said the combined company produced revenue of $5.4bn on a pro-forma basis for the full year ended on December 31.

AerCap has been one of Waha Capital’s most lucrative investments since it snapped up an initial 20 per cent stake in the company in 2010 in a deal valued at $388m. Its stake is now valued at $1.4bn.

Last month Waha Capital completed the sale of its 60.7 per cent stake in another aircraft leasing business, AerLift Leasing, in a transaction valued at Dh294.3m. The sale formed part of a gradual shift in strategy for the company involving greater focus on its core assets and becoming a regional investment management company.

AIG has been gradually selling off its major units since receiving a US government bailout during the 2008 global financial crisis. AIG’s chief executive, Robert Benmosche, said net cash proceeds to the company were around $2.4bn after the settlement of internal loans. The sale will have a “positive impact on AIG’s liquidity and credit profile”, he said.

Waha Capital, in which Mubadala Development owns a 15.4 per cent stake, will retain its two seats on AerCap’s board of directors, as well as representation on the various board sub-committees on which it serves.

tarnold@thenational.ae

Follow us on Twitter @Ind_Insights

Published: May 15, 2014 04:00 AM

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