Waha posts steep drop as investment values fall

Waha Capital, the Abu Dhabi-listed investment company, posted a 90 per cent drop in second-quarter profits. The news came as the value of its investments dropped along with the fortunes of the property and financial sectors in which it invests. Its net profit dropped to Dh5.9 million (US$1.6m) from Dh59.4m in the same quarter the year earlier, the company said in a statement yesterday on the Abu Dhabi Securities Exchange (ADX) website.

In the first half of the year, the company said its property investments lost Dh3.4m and its financial services assets dropped Dh405,000. Waha is involved in property and leasing for the oil and aviation sectors, as well as financing deals for military aircraft for the UAE Armed Forces. Despite the fall in profits, the company's shares advanced in expectation of a $1.5 billion bond issue by the company's aerospace unit.

"The stock had already climbed 15 per cent in the last two sessions and it was thought the stock would give back some of its gains but it hasn't," said Ali Khan, the managing director and head of brokerage at Arqaam Capital. Waha Aerospace, which is based in the Netherlands, plans to issue bonds totalling $1.5bn, which will be guaranteed by the Abu Dhabi Government. Moody's Investors Service assigned the proposed bonds an "Aa2" debt rating.

The company's revenues for the second quarter were Dh76.7m, down 20 per cent from the same period last year. Waha Capital is 14.71 per cent owned by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, while 5.13 per cent is owned by a private investor. The remaining 80.16 per cent is held by the public. It also has investments in the transport, property and financial services sectors.

Waha Aerospace was set up by Waha Capital as a special-purpose entity to issue the bonds. If Waha Aerospace failed to pay interest on the notes, the Abu Dhabi Government would cover the shortfall after a notice of demand, Moody's said last week. The bonds will be used to finance the purchase of six Boeing C-17 transportaeroplanes by the country's Armed Forces. The Waha Aerospace is expected to issue a 10-year bond priced at 225 basis points over the yield on five-year US Treasuries.

Waha Capital was given a mandate to raise a total of Dh12bn for the UAE military, Salem Rashed al Noaimi, the company's chief executive, told Bloomberg in May. More than half of that amount was raised last year, Mr al Noaimi said. Waha's stock closed 1.4 per cent higher at 68 fils each on ADX yesterday. @Email:[e-mail]