2PointZero profit triples to $2.3 billion on acquisition spree

Key Points

1. 2PointZero's nine-month net profit tripled to Dh8.59 billion, the Abu Dhabi group told the bourse.
2. Revenue rose several-fold to Dh33.7 billion, helped by a Dh5.8 billion net fair value gain.
3. Third-quarter profit still fell 25 per cent, showing acquisition costs are biting into quarterly earnings.

The latest:

Nine-month net profit at Abu Dhabi’s 2PointZero Group tripled to Dh8.59 billion, or $2.3 billion, from Dh2.64 billion a year earlier, the investment company said in a filing to the Abu Dhabi Securities Exchange on Friday. Revenue climbed several-fold to Dh33.7 billion. Chief executive Samia Bouazza pointed to Dh15.7 billion in group cash and bank balances and Dh155 billion in total assets as the base for further investment.

Details:

• The earnings driver: The company recorded a net fair value gain of Dh5.8 billion over the nine months, according to the statement, with investment and other income also rising. That single gain accounts for a majority of the Dh8.59 billion attributable net profit, meaning revaluation rather than trading alone shaped the headline figure.
• The quarterly reversal: Third-quarter profit fell about 25 per cent to Dh1.5 billion on higher costs and expenses, the company said, even as quarterly revenue rose to Dh11.8 billion. The group did not break down which costs drove the decline.
• The CEO’s framing: Bouazza said the company is “building on a strong foundation,” citing the cash position and Dh155 billion in total assets as leaving the group well placed to invest through the cycle. She set out no target for further acquisitions.
• The Africa deal: In August, wholly owned subsidiary ePointZero acquired a 90 per cent stake in Azura Power Holding, a pan-African independent power producer. The purchase price was not disclosed in the company’s statement.
• The US entry: In July, ePointZero completed the purchase of Traverse Midstream Partners from The Energy & Minerals Group in a deal valued at $2.25 billion. It is the group’s first US natural gas investment, taking it into a market where it previously held no assets.
• What the pipelines are: The Traverse transaction hands ePointZero significant minority stakes in two US midstream assets: 35 per cent of the Rover Pipeline and 25 per cent of the Ohio River System. Both are operated by Energy Transfer, which remains the operating partner in each.
• The divestment: In June, 2PointZero completed the sale of its 7.29 per cent stake in Taqa to Abu Dhabi Power, a wholly owned subsidiary of L’imad, Abu Dhabi’s sovereign investment vehicle. The sale value was not disclosed.
• The mining arm: Mining and trading subsidiary International Resources Holding is also expanding. In July, IRH and India’s Adani Enterprises signed an agreement with the Odisha state government to develop an integrated greenfield aluminium project valued at $11.5 billion.

Background:

2PointZero Group was created in November last year through the merger of three Abu Dhabi investment companies: Multiply Group, Ghitha and 2PointZero. The combined entity focuses on the energy and consumer sectors, and the merger explains why year-on-year revenue and profit comparisons rise several-fold.

Between the lines:

The two halves of the result point in opposite directions. The nine-month jump rests heavily on the Dh5.8 billion fair value gain and on a merger that reset the comparison base, while the only clean quarterly read — Dh1.5 billion, down 25 per cent on higher costs — came as the group absorbed Azura, Traverse and the Odisha commitment. Rising revenue alongside falling quarterly profit is the signature of an acquisition phase still being paid for.

What’s next

The full-year results will show whether the fourth quarter repeats the 25 per cent profit decline once acquisition costs are fully booked, and whether the Dh15.7 billion cash pile funds another deal after Azura and Traverse.