ABU DHABI: Waha Capital , a leading Abu Dhabi-based investment company, has sold three million shares in New York-listed AerCap Holdings N.V. (“AerCap”) and entered into its second hedging and financing transaction on its remaining unhedged shares in the world’s largest independent aircraft leasing company.
A company press release said that the hedging transaction on the remaining portion of Waha Capital ‘s overall holding in AerCap — approximately 12 million shares follows a similar transaction executed in September 2014 on half of its holding. The strategy limits downside equity market risk for Waha Capital , and provides the company additional funding to be used for further investments.
Through the hedging transaction, Waha Capital has effectively locked in the value of 12 million AerCap shares at a minimum price of US$37.11 per share, subject to certain adjustments. This transaction allows Waha Capital to benefit from share price appreciation in AerCap up to an average maximum price of US$52.22 per share. This compares favourably to the original investment price of US$13.00 per share and Waha Capital ‘s pre-transaction carrying value of US$33.95 per share as of 30 September 2014. AerCap’s share price was US$43.40 at close of New York trading on 1 December 2014.
The company also concurrently sold three million shares in AerCap – representing 10% of Waha Capital ‘s overall holding — through a block sale transaction. As a result, Waha Capital ‘s beneficial ownership in AerCap was reduced to 12.6 percent from 14.1 percent.
Both the hedging transaction and the block sale serve to raise significant funds of approximately AED 2 billion (US$532 million) for further diversification of the company’s portfolio while reducing balance sheet risk and lowering the company’s cost of capital. Waha Capital ‘s cash balance and available credit facility limit provides funding of approximately AED 3.5 billion (US$950 million) for new investments and corporate purposes.
Waha Capital reported a net profit of AED 1.6 billion for the first nine months of 2014, nearly a six-fold increase on the same period in 2013. Its leverage ratio currently stands at 22%, compared to 37% at the end of 2013.
In addition to its stake in AerCap, Waha Capital invests in healthcare, energy, financial services, infrastructure and other high-potential sectors in the MENA region, as well as in global capital markets.