Ahmad Faraz Arif
PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited
The ratings reflect Dawood Hercules Corporation Limited's ("DH Corp" or "the Company") very strong profile as an investment company with investments in diversified sectors mainly through Engro Corporation Limited ('Engro Corp'). DH Corp has a structured oversight process in place for monitoring and making new investments, an important requisite for any HoldCo. Liquid funds are held in money market instruments indicating strong liquidity. The Company has invested in blue chip market securities to mitigate investment related risks. DH Corp is exploring new investment avenues to add to its portfolio. Lately, the Company invested in the technology led the business through a newly formed wholly owned subsidiary, Empiric Al (Pvt.) Ltd., to provide competitive services in data science, cyber security, and software engineering. The Company continues to receive consistent dividend income from Engro Corp, as the underlying businesses have witnessed substantial growth in each of its business verticals. The Company boasts a very strong financial risk profile owing to strong coverages and significant liquidity showing a robust position. Lately, the Company has loaded short term debt to fund its equity portfolio. However, leveraging remains minimal with largely an equity-based capital structure. Moreover, very strong business acumen of the sponsoring family and strong governance practices provide support to the ratings.
The ratings depend on the management's ability to sustain low risk profile and follow prudent investment policy. At the same time, maintaining a strong financial profile and liquidity remains important. Any significant increase in debt and/or prolonged downturn in invested companies will impact the ratings.
Dawood Hercules Corporation Limited ("DH Corp" or "the Company") is a public listed company incorporated in 1968. The Company's principal activity is to manage investments including its subsidiary and associated companies. Dawood Group (Dawood Family and Associates) holds ~33% stake in DH Corp through its’ corporate entities (~20%) and individuals (~13%). Around ~54% is held by foreign companies and the remaining shares are held by financial institutions, general public, and others. The Company's BoD is chaired by Mr. Hussain Dawood, the patriarch of Dawood family. Mr. Mohammad Shamoon serves as the Company's CEO; Assisted by experienced professionals.