Shares in Waha Capital rose by their highest in eight weeks after the company announced that it was planning to launch a buyback.
The investment company announced yesterday that its board of directors will meet tomorrow to discuss conducting a share buyback programme, subject to receiving the required regulatory approvals.
Details of the timing of the proposed buyback, together with the number of shares sought and at what price, were not disclosed.
The company’s announcement sent shares soaring by as much as 8.2 per cent in the first hour of trading yesterday on the Abu Dhabi Securities Exchange before closing up 6.5 per cent at Dh3.12, their highest level since July.
Waha’s shares have risen 45 per cent since the start of the year.
The move to buy back shares can be interpreted as an attempt by the company to further bolster its share price, in particular to better reflect its holding in the New York-listed airline leasing company AerCap Holdings, according to Sanyalak Manibhandu, a research manager at NBAD Securities.
"Two weeks ago they did a successful hedging exercise to protect [the value of] their stake in Aercap," said Mr Manibhandu, referring to a US$575 million hedging deal that placing a minimum strike price of $42.39 per share and maximum strike price of $61.23 per share on half of its shares held.
Waha’s original investment was valued at $13 per share.
“Going forward the next step is for the company to try to pass on value to shareholders,” said Mr Manibhandu.
In May AerCap completed the US$7.6 billion acquisition of ILFC, the aircraft leasing arm of American International Group, creating the world's leading independent aircraft leasing company.
Waha Capital is the second-largest shareholder in the new entity with a 14.1 per cent stake.
“Implicitly the management are saying that the market is currently undervaluing Waha’s shares,” said Mr Manibhandu.
“By buying back the shares their aim is to encourage the market to sustain and re-rate the stock, to push up the price by buying stock at appropriate levels.”
Such a buyback of shares is likely to happen over a period of months or even years, following a similar path to the buy back of shares launched early last year by Abu Dhabi Commercial Bank, he said.
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