A.SREENIVASA REDDY (ABU DHABI)
International Holding Company’s (IHC) shares have risen on the Abu Dhabi Securities Exchange (ADX) over the last week following the announcement of its Dh5 billion share buyback programme.
IHC, founded in 1998 to develop non-oil sectors in Abu Dhabi, stated in a filing with the Abu Dhabi Securities Exchange that the share buyback programme will occur in phases over a period of one year.
The first tranche of Dh1.8 billion share buyback will commence on November 18, Chief Executive Officer of IHC, Syed Basar Shueb, said in a statement. Multiple purchases will take place within each tranche, which will happen at either monthly or quarterly intervals. “Each tranche will be disclosed in alignment with ADX’s strict market transparency requirements,” the CEO said.
The share price, which was hovering around Dh403 on November 13, rose to Dh414 at the end of trading on November 15, following the announcement of the buyback programme. It is likely to increase in the coming Monday trading as the first tranche sale begins. The IHC’s market cap stood at Dh908 billion, according to the latest data. It was the most traded stock in terms of value at the ADX on Friday, the data showed.
The share buyback programme aims to enhance shareholder value and maintain an efficient capital structure, the company said. “Launching the share buyback programme reaffirms our commitment to generating long-term value for our shareholders. With our robust cash flow and strong balance sheet, we are well positioned to implement this strategic initiative,” Syed Shueb said.
Commenting on the IHC’s buyback, Stuart Yeomans, CEO of Farringdon Capital, said: “The company’s decision to conduct a share buyback should enhance its shareholder value and reflects their confidence in their financial position.”
Repurchasing the shares essentially means they are reducing their share count, which will increase the earnings per share and improve their overall share price, he said.
“Based on historical trends, this should increase IHC share value by around 10% and a Dh440 to Dh450 share price should be achievable within 12 months,” Yeomans, who is a seasoned observer of capital markets, predicted.
The shares will be bought at the prevailing market price on the day of the purchase, according to the filing with the ADX. All transactions and settlements will occur in accordance with the protocols of the ADX, the filing stated. “Any trading or purchases under the programme are not allowed to take place off-market,” the filing categorically stated.
The filing also noted that all bought-back shares will be counted as treasury shares and will not have voting rights. “If treasury shares are not sold back in the market within two years, the shares will be cancelled, and the board of directors will pass a resolution to reduce the company’s share capital to the extent of the shares cancelled,” the ADX filing said.
IHC has hired International Securities as the agency to manage the buyback programme.