Abu Dhabi, UAE – Waha Capital, an Abu Dhabi-listed investment management company, reported a 221 percent increase in net profit year-on-year to AED 318 million ($85.86 million) for H1 2023 – equating to a return on equity of 12.6 percent – driven by healthy returns from its capital markets funds and higher fee income from managing third-party assets.
The company recorded total operating income of AED 500 million ($135 million) in the first six months of 2023, an increase of 123 percent from AED 224 million ($60.48 million) a year earlier. Income growth was primarily driven by the strong performance of Waha Investment, a wholly-owned asset management subsidiary, as its emerging markets funds continued to deliver considerable returns and attract significant capital.
While the company has maintained strong cost discipline, operating expenses have increased due to performance-based incentive compensation accruals, which have risen in line with investment results. Higher benchmark interest rates have contributed to an increase in finance costs to AED 61 million ($16.47 million) from AED 54 million ($14.58 million) a year earlier.
For the second quarter, Waha Capital reported total income of AED 259 million ($69.93 million) and net profit of AED 170 million ($45.90 million). Waha Capital’s total assets under management (AUM) stood at AED 9.0 billion ($2.43 billion) at the end of June 2023, versus AED 6.3 billion ($1.70 billion) a year earlier.
Waha Investment, the capital markets business that actively manages emerging markets funds, achieved AED 481 million ($129.87 million) in net investment returns in the first half of 2023, while fee income from managing third-party capital almost doubled year-on-year to AED 46 million ($12.42 million). The business reported a net profit of AED 458 million ($123.66 million), compared to AED 113 million ($30.51 million) a year earlier.
The company’s flagship credit and equity funds produced positive returns in the face of continued volatility in global markets, continuing their exceptional multi-year track record of outperformance.
The Waha MENA Equity Fund achieved a total return of 10.5 percent versus 5.4 percent by its benchmark in the first six months of the year. The fund has delivered a cumulative return of 321.4 percent since its inception in January 2014, versus the S&P Pan Arab Composite Index’s return of 62.9 percent.
The Waha Emerging Markets Credit Fund, which pursues diverse long-short strategies in emerging markets fixed income, recorded a total return of 3.8 percent, compared to 4.1 percent for its benchmark. The fund has delivered a cumulative return of 189.2% since its inception in 2012, versus the JPMorgan EMBI Global Diversified Index return of 45 percent.
The Waha Islamic Income Fund delivered a total return of 3.78 percent (gross of fees) versus a benchmark return of 2.03%. The fund, which mainly invests in global Sukuk and Shari’ah-compliant equities, has recorded a cumulative return of 19.4 percent (gross of fees) since its inception in August 2020, versus a -3.1 percent return by the Dow Jones Sukuk Index.
Waha Land, a wholly-owned subsidiary that develops, owns, and operates light industrial real estate assets, recorded total revenue of AED 23 million ($6.21 million) in the first six months of 2023, driven by steady rental income.
Waleed Al Mokarrab Al Muhairi, Chairman, said: ”Waha Capital performed strongly in the first half of 2023, generating a net profit of AED 318 million ($85.86 million) and a return on average equity of 12.6 percent. Despite challenging macroeconomic conditions, the emerging markets funds managed by Waha Investment have delivered positive returns, further extending their multi-year track record of outperformance. This has resulted in inflows of AED 2.1 billion ($567 million) in third-party capital, which has contributed significantly to the company’s fee income.