Waha Capital, a leading Abu Dhabi-based investment company, has entered into a hedging transaction on half of its shares (c. 14.9 million) in New York-listed AerCap Holdings N.V. (AerCap), the world's largest independent aircraft leasing company.
Through the transaction, Waha Capital has effectively locked in the value of these shares at a minimum price of $42.39 per share, up to a cap of $61.23 per share, subject to certain adjustments. This price range compares well to the original investment cost of $13.00 per share and its carrying value on Waha Capital's balance sheet of $31.87 per share as of 30 June 2014. AerCap's share price closed at $49.17 on 2 September 2014, the company said in a press release today.
The transaction provides additional funding of $575 million, which will be used to partially repay existing debt and to fund new investment opportunities. Post-transaction, Waha Capital's cash balance and available credit facility limit will provide funding of approximately AED 1.8 billion ($500 million) for new investments.
In May, AerCap completed the acquisition of International Lease Finance Corporation ("ILFC") from American International Group, Inc. ("AIG"). The combined entity is now the largest independent aircraft leasing company in the world, with an owned and managed fleet of over 1,300 aircraft and total assets of approximately $44 billion. After the hedging transaction, Waha Capital will retain an economic shareholding of approximately 14.1% in the combined, larger company.
In August, Waha Capital reported a record net profit of AED 1.138 billion for the second quarter of 2014, the first time quarterly net profit exceeded the AED 1 billion mark. The company's half-year net profit reached AED 1.289 billion, representing a 9-fold year-on-year increase. These exceptional results were largely due to the unlocking of part of the value in Waha Capital's stake in AerCap following its acquisition of ILFC.