Abu Dhabi's Waha Capital launches Islamic fund amid growing investor demand

Investment company expects Sharia-compliant fund to attract more than $500m

The Abu Dhabi Securities Exchange. ADX-listed Waha Capital's new fund will invest in sukuk and equity markets around the world. Sammy Dallal / The National. 

Waha Capital launched a new Sharia-compliant fund to meet growing investor demand and expects it to attract more than $500 million (Dh1.83 billion).

The open-ended Waha Islamic Income Fund will invest in assets in sukuk and equity markets around the world, the company said yesterday.

“While our existing funds have some Sharia-compliant elements in them, there has been a steadily growing demand from our existing clients over the past couple of years for us to develop such a fully-fledged Islamic fund,” said Amr Al Menhali, chief executive officer of Waha Capital.

The $2.4 trillion Sharia-compliant finance industry is expected to register “low to mid-single-digit growth” this year and in 2021, according to S&P Global Ratings.

The industry grew by 11.4 per cent in 2019 on the back of total sukuk issuance that was higher than expected.

The volume of Islamic bond issuances is expected to drop to $100bn this year, from last year's $162bn when Turkey, GCC issuers, Malaysia and Indonesia supported the market.

Saudi Arabia will remain the world’s largest Islamic banking market, with the sector expected to expand rapidly in Malaysia, according to Moody’s Investors Service.

Waha Capital’s new actively managed Islamic fund is the fourth within its asset management business.

“We are confident that the new fund will be well-received because it avoids investment in prohibited or controversial activities or assets and business sectors that may be considered as particularly risky or potentially volatile,” Mr Al Menhali said.

“It will also only invest in entities that have relatively low gearing.”

The Abu Dhabi-listed company, which counts Mubadala Investment Company as one of its shareholders, plans to develop a full portfolio of Sharia-compliant offerings to meet investor demand.

“We are positioning this new fund as a focal point around which we can build a whole Sharia-compliant offering,” Mr Al Menhali  said.

Waha Capital swung to a profit in the second quarter on the back of higher operating income. Net profit attributable to the owners of the company for the period ending June 30 reached Dh267.2m, compared with a loss of Dh124.3m during the same period last year.

Its private investment business recorded a net profit of Dh3.2m, compared with a loss of Dh186.1m in 2019.

The company manages assets across sectors such as health care, financial services, energy, infrastructure, industrial property and capital markets.

It said earlier this month that it planned to invest $120m in a number of US-listed healthcare, technology and telecoms companies. The company invested Dh184m in New York-listed online travel company Despegar.com this month.

Waha Capital has invested in companies such as Dubai FinTech company Channel VAS, Deem Finance, National Energy Services Reunited and Petronash Holdings. It sold its stake in New York aircraft leasing company AerCap last year in a deal that generated net cash proceeds of Dh933m.

Total assets at the end of June stood at Dh9.49bn, up 2 per cent since the end of last year.

Waha Capital’s investors include pension funds, endowments, sovereign wealth funds and family offices from North America, Europe and the Gulf. The company also invests in its own funds.

Among its three existing funds is the Waha Central and Eastern Europe, Middle East and Africa Credit Fund, which invests in emerging markets and has generated a cumulative return of more than 180 per cent from the time it was formed in 2012 up to the end of 2019.