Skip to content Skip to Search
Skip navigation

Abu Dhabi’s International Holding Co. is ‘next Berkshire Hathaway’

The conglomerate with 100+ entities in nine business segments seems immune to global volatility

Reuters
Abu Dhabi's IHC is expanding its portfolio

While the global markets are obsessed with the Russia-Ukraine war and the Federal Reserve, GCC markets have been having a great run on the back of strong oil prices. 

However, Abu Dhabi’s International Holding Company (IHC) is one company that seems particularly immune to global volatility. 

IHC is a conglomerate with 100+ entities in nine different business segments ranging from real estate to healthcare employing about 7,800 employees.

The Royal group holds 74% while the remaining shares are available for trading in the stock exchange as free float. And its share price performance is turning heads. 

Though the company was listed in 2005, it remained small in operations as it initially focused only on fish farming and animal feeds.

Its real inflection point emerged in 2017-18 when its name was changed from Asmak to IHC and then a big explosion in performance followed suit.

The stock price of IHC rocketed from AED 1 at the beginning of 2019 to AED 295 by June 2022.

Its market capitalisation jumped from AED 11 billion in 2019 to AED 538 billion making it the largest listed stock in the Abu Dhabi exchange. 

During this period revenues also multiplied from AED 1 billion to AED 28 billion. The business model of IHC is primarily focused on rapid acquisitions followed by realisation of profits.

And while comparison to Berkshire Hathaway may look far-fetched right now given the fact that the US finance giant employs nearly 378,000 people with $900 billion in assets, there are parallels around their business models.

However, it should be noted that the sudden extraordinary spike in the stock during the last three years created some valuation concerns too.

The most followed price to earnings ratio jumped from a modest 10 in 2015 to over 200 in 2020, though it has cooled down to 59 now. But that still is very high.

What’s more, its price to book measure jumped from 1.4 in 2015 to over 16 now, again a level that can be considered elevated. 

Presently, IHC is focused on growth and, therefore, is not a dividend stock. From a long-term investor value perspective, the stock should mellow on valuation and morph into a dividend yielding stock which can then set the stage for a Berkshire Hathaway-esque long-term performance. 

Also, IHC would do well to encourage equity research coverage for global investors to gain traction on the story. 

Admittedly, it is not easy to perform equity research on a holding company with nearly 100+ subsidiaries cutting across several sectors.

When benchmarked globally, stocks from the region enjoy poor research coverage. With MSCI index inclusion, this has to change for the better if stories like IHC need to go global. 

Value of USD 1 invested on October 2005 (listing of IHC)
IHC221.85
Abu Dhabi Index (ADX)1.75
Dubai Index (DFM)0.41
S&P GCC Composite0.76

M R Raghu is the CEO of Marmore MENA Intelligence, a subsidiary of Kuwait Financial Center (Markaz), an asset management company.

Latest articles

The WakeCap system being used on a construction site

Aramco adopts heat-sensing construction helmets

Saudi Aramco is deploying advanced safety helmets equipped with heat stress sensors to protect workers on some of its construction sites, a critical concern in the Gulf region’s scorching climate. The helmets, developed by Dubai and Saudi Arabia-based construction tech startup WakeCap, utilise internet-of-things (IoT) technology that monitors worker attendance, location, and safety incidents in […]

Wind turbines above the village of Kotronas in the Peloponnese region. Greece's Terna Energy invests in wind, solar, hydroelectric and pumped storage projects

Masdar buys Greece’s biggest investor in renewables

The UAE’s state-owned clean energy company Masdar is to acquire a majority share in Terna Energy of Greece. The initial deal – one of the largest in the European renewables market and the biggest ever energy transaction on the Athens Stock Exchange – is for a 67 percent stake. The price of €20 ($21.45) per […]

KBR Iraq

US firm wins $46m contract to boost Iraq infrastructure 

US engineering giant KBR has won a five-year $46 million contract to support Iraq’s infrastructure development and future energy projects, including mega-projects. The company is expanding its presence in Iraq, establishing a new office in Baghdad and said it is also considering the creation of a design centre to enhance local engineering skills. Under the […]

The UAE attracted FDI inflows of $30.7 billion last year, a 35 percent year-on-year growth

UAE ranks second in global greenfield FDI projects

A 33 percent year-on-year surge in greenfield FDI projects in the UAE catapulted the Emirates up two places to the second spot after the US in 2023. There are now 1,323 greenfield FDI project announcements, state-run Wam news agency reported, citing the World Investment Report 2024. The UAE attracted FDI inflows of $30.7 billion last […]