Exclusive: Syed Basar Shueb on how IHC is cracking the growth code

Abu Dhabi’s International Holding Company (IHC) has grown exponentially over the years from a $200m firm with interests in fish farms and real estate into a conglomerate with more than 900 subsidiaries and a market capitalisation of $239bn (Dhs877bn) as of May 27, 2024 – bigger than Walt Disney, McDonald’s or L’Oréal.

With investments ranging from Elon Musk’s SpaceX to Zambia’s Mopani Copper Mines and Abu Dhabi’s biggest property developer Aldar Properties, IHC is at the forefront of a drive to diversify the UAE’s economy while developing non-oil business sectors.

Here, the holding firm’s CEO talks about the company’s buyback programme, its mining businesses and investments in Zambia and plans to list subsidiaries including the newly established holding firm 2PointZero.

Q. IHC’s net profit soared by a record 87.6 per cent in Q1 2024. Which sectors/verticals contributed to the growth and how do you see this pan out throughout the year?

Our net profit in the three months to March 31 surged by a record 87.6 per cent to $2.2bn (Dhs8.02bn), almost double the Dhs4.27bn for the corresponding period a year ago, while our revenue reached Dhs19.29bn, up 22.5 per cent from Dhs15.74bn.

The growth in the previous quarter was driven by strong performances in core divisions including real estate and construction, marine and dredging, technology, and our contracting business.

Earlier in 2024, we consolidated our assets into a new holding company 2PointZero and merged Modon Properties, Abu Dhabi National Exhibitions Company (ADNEC), Miza Investments and other real estate assets, contributing to Q1 2024 earnings growth.

IHC will perform well throughout the year. The strong pipeline of projects with our portfolio companies, be it in the real estate and construction vertical, healthcare, technology sector or marine and dredging will continue to drive growth.

Q. IHC announced a Dhs5bn buyback programme in May. What does this mean for IHC and how is this aligned with your growth strategy?

We initiated a Dhs5bn buyback programme in May, supported by the company’s strong financial position, including significant cash flow and a healthy balance sheet.

We believe that there is significant value in multiple sectors that will be important in the future. This also applies to the specific areas we are focusing on, some of which are already contributing to the overall ecosystem in the various sectors we are involved in.

IHC has developed ecosystems across various industries over the years, and we anticipate substantial value generation from these businesses in the future. For instance, in our food and agriculture sector, we are involved in farm operations, processing facilities, distribution networks, retail, and last-mile delivery.

This buyback programme also presents an opportunity for our shareholders who wish to sell their stock.

 

Q. IHC consolidated six companies under 2PointZero in Q1 2024. What was the vision behind the creation of the holding firm and what can be expected going forward?

2PointZero is the newest holding company in our portfolio, with assets across various sectors including financial services and mining. Its portfolio includes the asset management firm Lunate, International Resources Holding, private investment firm Chimera, Egypt’s Beltone Financial, crypto mining firm Citadel Technologies, and the Middle East-focused Sagasse Investments.

We are very bullish on mining, which is one of the verticals that we built within the group, building it from scratch. Previously, we invested in several different mining projects until we reached a point where we decided to set up International Resources Holding.

IHC plans to invest around $16bn (Dhs 58.7bn) to $17bn (Dhs 62.4bn) per year towards the development of existing and new business or acquisitions and 20 per cent of that will be allocated to the mining sector. We completed the acquisition of Zambia’s Mopani Copper Mines in March, and again I am not investing in mining for the sake of investing but the company is focusing on energy transition materials including copper cobalt and nickel.

We are considering different strategies, but currently, our focus is on these particular resources. In terms of markets, we are investing in Africa, Australia and soon South America.

Q. The company has listed several subsidiaries and is preparing more listings in the medium term. How are these plans shaping up?

IHC has a healthy number of direct listings in the pipeline over the next 12 months including Sirius International Holding (Sirius), 2PointZero and International Technology Holding. Our subsidiaries are going to list other assets as well.

Q. Technology and sustainability rank among GCC companies’ growth strategy priorities in 2023. Please tell us briefly what IHC is doing in this space.

On the tech side, we opened the year by unveiling ‘Aiden Insight’, the world’s first AI-powered board observer. We introduced the initiative at the group level to advance corporate governance and decision-making, with plans to introduce it across all our verticals and subsidiaries.

On sustainability, the hosting of COP28 in the UAE was an eye-opener that accelerated sustainable practices across the corporate world in the Middle East region. Our subsidiary, Sirius, launched Smart Sustainability Solutions (S3) during last year’s climate conference and is the pioneering climate company offering end-to-end industrial scale solutions to support the transition to a net-zero economy.

S3 is investing in four critical segments of the new climate economy including methane, carbon, circularity (circular economy), and water efficiency.

We also have ALTÉRRA, a Lunate-backed climate fund, that is designed to bridge the climate finance gap and aims to stimulate $250bn of investment by the end of the decade. The fund will allocate $25bn towards climate strategies and $5bn specifically to incentivise investment flows into the Global South.

Q. IHC is the first company in the world to appoint an AI-powered board member. Tell us the vision behind Aiden Insight and how will it revolutionise how the group navigates the complexities of the global investment landscape.

We are 90 days ahead of our strategic planning, thanks to Aiden Insight. Aiden confers a multitude of benefits to us ranging from bolstering decision-making through enhanced data analysis and the promotion of a culture of innovation.

As humans, we have limitations but Aiden contributes to operational efficiency and helping discover synergies between group companies while navigating the complexities of the global investment landscape to help us when we make acquisitions.

Aiden continuously processes and instantly analyses decades of business data, financial information, market trends, and global economic indicators, helping the board formulate a strategy for resource management and advanced risk management.

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