Waha Capital PJSC, an Abu Dhabi investment firm, will raise $575 million from a hedging deal with banks including Deutsche Bank AG and Citigroup Inc. on half its stake in aviation leasing company AerCap Holdings NV.
Waha has entered the transaction on 14.9 million of its shares in New York-listed AerCap, which locks in the share value at a minimum of $42.39 and a maximum of $61.23, according to a statement posted on Abu Dhabi stock exchange today. The money raised will be used to pay debt and fund future investments, Waha said. AerCap shares closed at $49.17 in New York yesterday.
The deal is a funded collar transaction with Deutsche Bank, Nomura International Plc and Citigroup, according to a separate AerCap statement late yesterday. Under the terms of the deal, Citigroup and Deutsche Bank will borrow 14.9 million AerCap shares and then sell 10.2 million through an underwritten offering, with the remainder sold by the three banks in block or negotiated deals on the New York Stock Exchange.
AerCap in May completed the acquisition of International Lease Finance Corp. from American International Group Inc., making it one of the world’s largest aircraft leasing companies with an owned and managed fleet of 1,300 planes. Waha will retain an economic shareholding of 14.1 percent in AerCap Holding after the deal, according to today’s statement.
A collar is usually implemented after a stock has risen substantially. It involves buying a put option on a stock, which is an option to sell the share at a predetermined price along with the simultaneous sale of a call option, which gives the buyer the option to buy a share at an agreed price.
After the transaction Waha will have cash and available credit facilities of up to 1.8 billion dirhams ($490 million) to fund new investments, according to the company. Waha originally bought the AerCap stock at a cost of $13 a share, which now have a value of $31.87 on its balance sheet.
Waha Capital is seeking healthcare acquisitions in the U.A.E. after Dubai announced mandatory health insurance, Chief Executive Officer Salem Rashid Al Noaimi said in March. The company reported a second-quarter profit of 1.14 billion dirhams compared to 38.9 million dirhams a year ago.
The shares rose 3.4 percent to close at 3.05 dirhams on the Abu Dhabi bourse today. They’ve gained 42 percent this year.