KARACHI: The Boards of Dawood Hercules Corporation Limited (DH Corp) and Engro Corporation Limited (Engro Corp) have given initial approval to a proposal aimed at restructuring the shareholding between the two companies.
This move is intended to boost investment opportunities for the enterprise pending final approval from both the Board and shareholders. The proposed restructuring seeks to streamline the investment efforts of both companies.
DH Corp specializes in capital allocation across various sectors and assets, while Engro Corp has a strong track record in developing and managing large-scale industrial projects across five business verticals. Although both companies have delivered solid returns to shareholders, the current challenging external environment requires a more expansive and agile investment approach.
The restructuring proposal aims to facilitate such an approach through a two-step process. This would involve rebranding DH Corp as Engro Holdings Limited, with Engro Corp becoming a wholly owned subsidiary of Engro Holdings.
As part of this process, minority shareholders of Engro Corp would become shareholders of Engro Holdings in a manner that preserves their economic ownership of Engro Corp. This consolidation would align investment efforts at the Engro Holdings level, allowing capital from Engro’s businesses to be deployed more efficiently across a wider range of opportunities, benefiting shareholders of both companies.
This revamped strategy reflects feedback received from minority shareholders over the years, advocating for a more flexible investment strategy across a broader spectrum of sectors to enhance returns. This restructuring addresses their concerns by providing a structural solution to meet their requirements. It would enable cash flows from Engro Corp’s underlying companies to be directed towards a wider array of investments by Engro Holdings, while also fostering agility and efficiency.
Furthermore, shareholders of Engro Holdings would continue to receive returns from Engro Corp and also benefit from other investments made by Engro Holdings.
Chairman Hussain Dawood said that this restructuring underscores their commitment to progress and is in line with the interests of all stakeholders, including shareholders, employees, and communities associated with Engro. He said that by broadening our investment horizon, Engro will be better positioned to partner with Pakistan in addressing some of the most pressing challenges of our time.
