Qatar’s Investment Holding Group Plans Acquisitions After IPOBy
Engineering contractor seeks businesses with higher margins
Targets provide services in infrastructure and energy sectors
Investment Holding Group, which plans to sell shares on the Qatar Stock Exchange through an offering that opens next week, is seeking acquisitions that will lift earnings even if sales continue to decline.
The company will either borrow or issue additional stock to buy new businesses because all of the proceeds from the initial public offering is going to the firm’s founders, Chief Executive Officer Wael Shtayyeh said in an interview in Doha on Wednesday. Investment Holding Group is selling 60 percent of its equity to local investors in a sale valued at 490.8 million riyals ($135 million).
"We are planning to expand our activities into areas with high returns in 2017," he said. Areas of interest include contractors in the oil and gas industry, and companies involved in infrastructure projects, Shtayyeh said.
Investment Holding Group, started more than 40 years ago, is looking to capitalize on a $200 billion spending spree ahead of the country’s hosting of the 2022 soccer World Cup and a rebound in oil prices amid efforts by major producers to curb supply. The expansion into new lines of business also comes as Qatar’s government, which swung to a deficit last year, plans to award 46 billion riyals of new projects this year.
Revenue slid 13 percent in the first half of 2016 to 237 million riyals, while net income declined 4 percent, according to the prospectus for the IPO. Shtayyeh attributed the drop in sales to the slowdown in Qatar’s economy last year, while a focus on higher-margin business helped to offset a bigger impact on the company’s profits, the CEO said.
Investment Holding, which counts Ghanim Sultan Al Hodaifi Al Kuwari and Wafa Soufan among its founders, owns majority stakes in eight construction contractors in Qatar. One of its most profitable divisions, Consolidated Engineering Systems Co., provided the fire-fighting system at Hamad International Airport and was responsible for half of the company’s first-half earnings, the prospectus shows.
The IPO opens Jan. 8 and will end Jan. 22, with the listing taking place once all the bids have been accepted and regulatory approvals done.