Gulf News - ADX-listed heavyweight IHC has plans to issue new shares

Dubai: Abu Dhabi’s International Holding Co. (IHC), with the highest market cap on ADX, is seeking regulator approval for changes to its share capital. This could include issuing new shares with the same nominal value - Dh1 - as the original, or through an ‘issuance bounce’ to the nominal value.

Once the approval is given, the IHC Board of Directors must implement the resolution of capital increase within three years from the date on which the resolution is passed. (IHC has also placed a provision for a reduction in the share capital.)

IHC has been on an investment spree, taking stakes in the recent IPOs from Burjeel Holdings and Bayanat AI. It has also outlined plans to launch a tech holding company, seeing IT as an area that could draw its attention in the near-term.

The stock - with a market cap of $200 billion - is trading at Dh382.40. Existing shareholders will have priority in subscribing to the newly issued stock.

If the process is initiated once all the approvals are in place, “It will herald the return of ‘conglomerate investing’, first championed by Berkshire Hathaway,” said Sameer Lakhani, Managing Director at Global Capital Partners. “It then becomes a structure that is optimally designed for long-term value creation and aligned with UAE’s 2030 vision.”

HC shot into prominence in 2020 when the stock streak extended to an 1,800 per cent upturn. Through 2021 and this year, IHC made sure to keep the spotlight trained on it through a series of investments cutting across industries, including recently a potential one in South America for an F&B entity.

NOMINAL VALUE OF DH1

IHC’s current issued capital is Dh1.82 billion with a nominal value of Dh1 apiece. All the company’s shares of the same class are equal to each other in rights and obligations.

If the issued shares are set at a price more than the Dh1 nominal value, the difference shall be added to the legal reserve, ‘even if the legal reserve exceeds half of the issued share capital of the company’.

Draft amendments

The IHC plan of action features as proposed draft amendments to its Articles of Association, and will be discussed and approval sought at the general assembly on November 9.

ANY IHC STOCK OFFER WILL THRILL INVESTORS

IHC issuing new shares is exciting for UAE financial markets. With a market cap of Dh698 billion, it is more than double the nearest one. Shares have also delivered great returns for investors, with in this year alone having rallied by more than 150 percent. So any issuance, especially a rights one, could garner a terrific response from the existing shareholder base if they are given the preference.

To top it, even the international institutional investors might are likely to subscribe, given that this is a high quality UAE holding company. The strong demand for UAE IPOs globally even amidst trying international circumstances this year is evidence. IHC's share issue has the potential to be the largest ever from a UAE company said Vijay Valecha, Chief Investment Officer at Century Financial.