Pedigree is Waha's best asset

The investment holding company aims to deliver as a partner of government and the private sector.

United Arab Emirates - Abu Dhabi - January 11th, 2010:  Salem al Noaimi, the CEO of Waha Capital in his offices on Khalifa Street.  (Galen Clarke/The National) *** Local Caption ***  GC01_01112010_Noaimi.jpg

The investment holding company aims to deliver as a partner of government and the private sector in the financial and maritime services sectors, as well as in property, by using its peerless connections to burnish its reputation at home and abroad. By any measure, the timing of the deal was terrible. For most of last year Waha Capital waited for the UAE Government to sign military contracts worth Dh11 billion (US$2.99bn), which would trigger the company's role as the middleman in arranging financing on the deal. And then the saga of Dubai World's $26bn debt restructuring effort started to unfold in November.

When the first deal was finally struck early last month for six Boeing military transport planes, the most common words used to describe the financial picture in the UAE at the time in the international media were "debt crisis" and "financial bailout". But within weeks, Waha came through. It secured Dh6.7bn in loans from eight European and North American banks for the first phase of the Government's procurement, for which it earned a fee.

Salem al Noaimi the chief executive of Waha and, at the age of 35, one of a new generation of young Emirati leaders working in the capital, called the deal impressive given the circumstances. "The timing was really critical," he says. "I was really proud of the fact that we were able to deliver." Delivering seems to be the theme for Waha, which began 13 years ago as an aviation leasing firm but in 2008 transformed itself into an investment holding company with assets worth Dh4.7bn in the property, maritime services and financial services sectors.

Perhaps the biggest assets of the company, however, are its pedigree and the goodwill it enjoys within the Abu Dhabi business community. The company has ties to the Abu Dhabi Government investment arm Mubadala Development, its largest shareholder, and the Offset Programme Bureau, which helped create it. And then there's Hussain al Nowais, its chairman and one of the best connected Abu Dhabi businessmen who is behind many of the emirate's largest industrial projects, including petrochemicals and railways.

"The deal flow that we get from the chairman and the rest of our board is one of our strengths," says Mr al Noaimi, and he lauded the company's "tremendous shareholder base". Mohammed Sheikh, an analyst with Injaz Mena, which published the only research report on Waha Capital last year, notes: "The better your board, the likely a company is to get good deals here." The firm is putting this goodwill into building a reputation as a dependable partner to government and private industry.

"These days, stakeholders and investors want to see tangible deliverables, and we are focusing on coming to market with this," Mr al Noaimi says. In addition to being a key financial partner of the Armed Forces, another high-profile project for the firm is within its land division, where it is building the Al Markaz mixed-used development. In the desert not far from Musaffah, Al Markaz will feature warehouses, storage and light-industry facilities, plus accommodation for 28,000 workers. To begin the project, Waha received a grant from the Government of 6 sq km of land.

The company plans to deliver part of the first phase, comprising housing and warehousing, by the end of the year or early next year. The total investment in the first phase, which will be completed late next year, is Dh4bn. It is all a far cry from the company's original brief. Waha was conceived in 1996 as Oasis International Leasing by local investors and BAE, the British defence giant that helped create the firm through an offset obligation.

The UAE requires offsets from foreign companies when it signs a contract. The foreign firm is required to either help start a new business in the UAE or transfer some of their technology in order to help build the local economy. These initiatives have created a host of viable businesses in the Emirates including Abu Dhabi Ship Building, the largest naval builder in the region. In the case of Oasis, its founders saw a need to develop the finance sector and leasing in particular, Mr al Noaimi says.

The company trades on the Abu Dhabi Securities Exchange, with 51 per cent of shares required to be held by UAE Nationals or entities. Mubadala is its largest shareholder at nearly 15 per cent, and other major investors include Invest AD, National Bank of Abu Dhabi and the Abu Dhabi National Hotels Company. In 2006, the company and its board decided to diversify, both to generate new revenue streams and take advantage of the opportunities that would be created by Abu Dhabi's development plans up to 2030, which call for major new investments, services and industries to transform the city into a leading global capital.

The company boosted its paid-up capital from Dh700 million to Dh1.5bn through support from its shareholders. Then, to better reflect its growing focus on Abu Dhabi and to lessen its emphasis on the global aircraft-leasing industry, the firm changed its name to Waha Capital two years ago - waha means oasis in Arabic. Waha Leasing is the largest of the four divisions, with stakes in more than 100 leasing deals of commercial aircraft to airlines, including Etihad Airways, Emirates Airline, Qatar Airways, Olympic Airways, Air Canada and Malaysia Airlines.

In April last year Waha Leasing formed a joint venture with Aercap, the Dutch aircraft finance firm. Each company agreed to invest $135m in a project to lease narrow-bodied Airbus A320s to global airlines. In a report to clients, Gary Liebowitz, an aerospace analyst at Wells Fargo, said Waha's partnership with AerCap could lead to more investments such as with AerCap's engine sales and leasing subsidiary, AeroTurbine. "Waha is interested in investing more broadly in the aerospace sector, and could take a role in AeroTurbine," he wrote.

Mr al Noaimi declines to offer specifics. "We continue to build businesses in the four sectors, and we are looking at other sectors, too," he says. That could require tapping its shareholders for more capital, although he says he does not foresee any such moves in the next six months. He also suggests that the company might divest some of its holdings. "We don't foresee Waha will continue to own 100 per cent of the businesses. The opportunities ahead of Waha over the next few years are tremendous."