PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited

The affirmation of DH Corp ratings reflects the strong weighted average credit quality of the investment portfolio, conservative financial policies and low debt levels. The Company holds investment mainly in Engro Corporation Limited ('Engro Corp'). During the year, the Board has proposed a scheme of arrangement, where DH Corp will be demerged into two legal entities. All assets, liabilities, and obligations except its investment in Engro Corporation Limited will vest into a new company called DH Partners Limited (DHPL). DHPL will issue shares to existing DH Corp shareholders in proportion to their holdings. As part of the arrangement, shares held by Engro Corp shareholders (excluding DH Corp) will transfer to DH Corp. In exchange, Transferred Shareholders will receive 2.24 DH Corp shares for each Engro Corp share, based on a specified formula. Consequently, Engro Corp will become a wholly owned subsidiary of DH Corp and DH Corp will be renamed as ‘Engro Holdings Limited’. The Proposed scheme is subject to corporate and regulatory approvals and sanction of the Scheme by the Honorable Islamabad High Court. DH Corp’s liquidity is excellent. All excess liquidity is consolidated at DH Corp, funded mostly by cash dividends from Engro Corp. Across the DH Corp, consolidated capital needs are modest, with liquidity characterized by positive operating cash flow in excess of capital spending, dividend flexibility that supports high levels of capital retention and sizable cash balances accumulated from internal cash flow and periodic asset sales. Supplementing its cash liquidity, DH Corp's short-term investment portfolio is regarded as highly liquid and concentrated in high quality assets. DH Corp has diversified pool of investments in various sectors i.e., technology, cement, banks, energy, petroleum sector through its listed equities' portfolio that enhance investment portfolio transparency. The remaining short-term investments of the Company have been aligned to match the economic conditions at play. DH Corp's credit profile also benefits from seasoned management team with a proven track record of carrying out the policies established by the Dawood group.
The creditworthiness hinges on the management’s adeptness in maintaining a conservative risk profile and adhering to a disciplined investment policy. Simultaneously, safeguarding a robust financial position and ensuring ample liquidity are paramount. Notably, any substantial surge in debt or prolonged downturns in the companies where investments are made will directly impact the ratings.

About the Entity
Dawood Hercules Corporation Limited (DH Corp), founded in 1968, is a publicly listed company. Its core focus lies in investment management. The Dawood Group, represented by Dawood Family and Associates, holds approximately 32.66% stake in DH Corp through corporate entities (around 30%) and individual holdings (approximately 2.45%). Foreign companies own approximately 48% of the shares, while the remaining ownership is distributed among financial institutions, the general public, and other stakeholders. Board of Directors is led by Mr. Hussain Dawood, the esteemed patriarch of the Dawood family. Mr. Mohammad Shamoon serves as CEO, supported by a team of seasoned professionals.