May 8, 2019 / 10:51 AM / 15 days ago

Abu Dhabi's Gulf Capital, Waha Capital hold merger talks: sources

DUBAI/ABU DHABI (Reuters) - Abu Dhabi investment firms Gulf Capital and Waha Capital have held exploratory discussions regarding a merger, three sources familiar with the matter told Reuters.

The talks have taken place over the last few months and may or may not lead to a deal, the sources said.

Private equity firm Gulf Capital manages over $4 billion in assets. Waha Capital’s total assets stood at $3.18 billion at the end of last year. It also managed funds worth around $700 million.

Waha Capital’s portfolio of investments includes stakes in aviation leasing firm AerCap Holdings, a major Middle East and North African oil and gas services provider and industrial real estate.

Abu Dhabi’s state fund Mubadala has a minority stake in Waha Capital and Abu Dhabi Investment Council (ADIC), a unit of Mubadala, is a shareholder in Gulf Capital.

Lower oil prices and government spending have spurred mergers and acquisitions in Abu Dhabi, the capital of the United Arab Emirates (UAE).

Waha Capital and Mubadala Investment Companydeclined to comment. Gulf Capital did not respond to an email seeking comment.

Shareholders of Gulf Capital were pushing for a possible merger with Waha, said the sources, declining to be named due to commercial sensitivities.

Gulf Capital has been under pressure from ADIC and from Abu Dhabi Commercial Bank (ADCB), which also has a stake in Gulf Capital and a board seat, to seal deals, the sources said. ADCB declined to comment.

There are some other shareholders who also want a merger, they said.

One of the sources said there could be some clarity about the merger plans by June.

However, the prospects for a deal are unclear following the appointment in March of Waleed Ahmed Al Mokarrab Al Muhairi as chairman of Waha.

Al Muhairi, an experienced executive who is also deputy group chief executive at Mubadala, is drawing up a strategy for Waha, one of the sources said.

It is unclear whether a merger might be part of that strategy, which should be presented to the board shortly, the source said.

Transactions in Abu Dhabi have picked up since two lenders combined to create First Abu Dhabi Bank in 2017. ADCB merged with two other lenders last week to create a bank with 423 billion dirhams ($115 billion) in assets, the third biggest in the UAE.

The talks also come amid some wariness among investors towards the private equity industry in the Middle East since the collapse of Dubai-based Abraaj Group last year.

Waha Capital abandoned plans to raise a $300 million private equity fund and is pushing ahead with a new strategy for its private equity business, Reuters reported in June.

Editing by Jason Neely and Mark Potter

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