A business from the UAE that in 3 years went from obscurity to a value of 240 billion. $
Three years ago, International Holding Company was a little-known company that ran fish farms, food and real estate businesses. He employed only 40 people. Today, the market capitalization of the group, which is listed on the stock exchange, is Abu Dhabi $240 billion, more than twice the size of global giants Siemens and General Electric, and has 150,000 employees.
It’s a remarkable transformation that has gone largely unnoticed outside the UAE and is a bit obscure — even by bankers in the region.
“No one knows,” replied one Gulf international banker when asked to explain the dramatic growth of IHC. That’s a common answer to questions about the conglomerate, despite it accounting for a third of the FADX 15, the benchmark ADX index of the Abu Dhabi Stock Exchange. With its share price up 42,000 percent since 2019, it has become the second largest company in the Middle East after Saudi Aramco, the state oil company.
Even Syed Basar Shueb, who took over as CEO of IHC in mid-2019, admitted it was “unbelievable”.
IHC, International Holding Company (Screenshot)
In an interview with the Financial Times, he insisted there were simple explanations for the company’s growth — the transfer of more than 40 companies, worth a combined $4.7 billion according to IHC, from the Royal Group, another Abu Dhabi conglomerate. Most businesses were transferred at a nominal value of one dirham, Shueb said.
Still, that only explains part of the story: IHC’s total assets rose from $215 million at the end of 2018 to $54 billion in the third quarter of 2022.
According to IHC, this is down to the growth of the businesses it now controls. “We don’t give any dividends, the profit we made in 2020, 2021 is mostly a return of what we invested,” Shub said. “We’re trying to create a giant here, a global giant.”
Unclear relationship between business and power?
Others, however, see the IHC as an example of the increasingly blurred relationship between business and power in Abu Dhabi, the UAE’s capital and the emirate’s richest member. It also raised questions about transparency.
“That’s probably the biggest threat to the ADX because we don’t know what’s going on,” the banker said, adding that there are a lot of great things happening on the ADX, and there’s also something that nobody knows.”
Such is the concern over IHC’s spectacular rise in market capitalization that officials in neighboring Dubai are no longer considering a future merger of its stock market with ADX, people familiar with the matter said.
Ernst & Young said the review of IHC’s latest financial report for the third quarter of last year was “significantly smaller in scope” than an audit in accordance with international standards and therefore E&Y could not obtain assurance “on all material matters”.
IHC said at the time that due to the limited amount of information that needs to be presented in interim financial statements, external auditors do not usually conduct a full audit of these financial statements.
Money (Unsplash)
The transformation of the company can be linked to the period of rule of Sheikh Tahnun bin Zayed al-Nahyan, one of the most powerful figures in Abu Dhabi, who took over as president in 2020. In addition to being the UAE’s national security adviser, he is the brother of the president, Sheikh Mohammed bin Zayed al-Nahyan, and he oversees the expansion of this business empire.
In addition to his role at IHC, he chairs ADQ, a new and increasingly active state investment vehicle, First Abu Dhabi Bank, the UAE’s largest lender, and Group42, an artificial intelligence and cloud computing company based in Abu Dhabi.
He also controls the Royal Group, a holding company that owns 62 percent of IHC. About 24 percent of IHC’s shares are in free circulation, with more than 90 percent of investors from the Gulf.
Big plans
Schueb added that the company has a war chest of $10 billion for investments and aims to grow group revenue from $7.7 billion in 2021 to $27 billion in 2023, mostly through acquisitions.
“Our five-year plan is to reach at least 1 trillion dirhams.” [272 milijarde dolara] revenue from acquisitions, and our own businesses are very good,” Schueb said.
IHC’s 2022 deals include a $2 billion investment in three Mumbai companies that are part of the empire of Gautam Adani, Asia’s richest man, $500 million to buy a 50 percent stake in a Turkish clean energy company and a $2 billion bid to buy 31.25 percent of Colombian food group Grupo Nutresa.
Schueb said IHC’s focus was on technology, healthcare, real estate, construction, food and agribusiness and general investments. Geographically, the company’s attention was focused on Asia and Latin America and looking for business in markets as diverse as Turkey and Indonesia.
Abu Dhabi (Unsplash)
He added that IHC is also “looking at certain businesses” in the US, where it already has some ownership, including a stake in Elon Musk’s SpaceX. However, he sees Europe as “a very uncertain market at the moment”.
“We are getting a lot of good deals in Europe, but we don’t know if these good deals and offers will actually stay good,” he added.
Asked why there has been no independent investigation into the group despite its size and ADX dominance, Schueb said “it’s up to them whether they want to do it or not”. “When I go to market for any IPO for my companies, I get enough questions from the local investor base. They have enough research on our finances,” he said, adding that “their books are very open, reports the Financial Times.
