The boards of Dawood Hercules Corporation Limited (DH Corp) and Engro Corporation Limited (Engro Corp) have tentatively approved a proposal to restructure their shareholding, aiming to enhance investment opportunities for the enterprise. The restructuring plan is subject to final board and shareholder approvals.

The proposed restructuring seeks to boost investment opportunities by aligning the investment strategies of both companies. Despite delivering healthy returns to shareholders, the challenging external environment calls for a more expansive and adaptable investing approach, especially amid difficulties in making large-scale investments.

The restructuring proposal aims to facilitate such an approach. Through a two-step process, DH Corp would be rebranded 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 while preserving their economic ownership of Engro Corp. This initiative would streamline investment efforts at the Engro Holdings level, facilitating efficient capital deployment across a broader range of opportunities, thereby benefiting shareholders of both companies. Engro Holdings’ current shareholders would enjoy seamless capital movement between the entities, while Engro Corp’s shareholders would gain from a broader investment mandate and leverage Engro Holdings’ investment expertise, as per a press statement on Monday.

This revamped strategy incorporates consistent feedback from minority shareholders over the years, advocating for a more flexible investment strategy across various sectors to enhance returns. This feedback has been pivotal in devising a structural solution to meet their needs. Through this restructuring, cash-flows from Engro Corp’s underlying companies would find expanded avenues for investment through Engro Holdings, promoting agility and efficiency. Additionally, Engro Holdings’ shareholders would continue to receive returns from Engro Corp and benefit from other investments made by Engro Holdings.

According to Chairman Hussain Dawood, “This restructuring is an extension of our unwavering commitment to progress, and is aligned with the interests of all shareholders, employees, and communities connected to Engro. By widening our investment horizon, Engro will be further enabled in partnering with Pakistan to solve some of the most pressing issues of our time.”

Published in The Express Tribune, May 7^th, 2024.

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