DUBAI, June 21, 2024 – In a move signaling confidence in the company’s future, shareholders of Dubai conglomerate IHC overwhelmingly approved a Dh5 billion ($1. 36 billion) share buyback program on Wednesday. The program, first announced in May, is designed to return capital to investors and bolster IHC’s financial ratios.
IHC intends to repurchase up to 3% of its outstanding shares at a price to be determined by a future board meeting. The buyback program is subject to regulatory approval.
The news comes amid a period of consolidation for IHC, which has seen its share price fluctuate in recent months. The company has attributed the volatility to profit-taking by early investors following a period of rapid growth.
Analysts believe the share buyback program is a signal from IHC’s management that they are confident in the company’s long-term prospects. By repurchasing shares, IHC reduces the number of shares outstanding, which can increase earnings per share (EPS) and make the stock more attractive to investors.
The buyback program is also seen as a way for IHC to improve its financial ratios. Share buybacks can improve a company’s debt-to-equity ratio and return on equity (ROE). A lower debt-to-equity ratio indicates a healthier financial position, while a higher ROE signifies that the company is generating a good return on its shareholders’ investment.
IHC’s decision to implement a share buyback program follows a similar move by another Dubai-based conglomerate, DP World, which announced a $1 billion buyback program in April. The trend of share buybacks among Emirati companies suggests a growing confidence in the local economy and a commitment to enhancing shareholder value.
The approval of the share buyback program is likely to be welcomed by IHC shareholders, who have seen the company’s stock price decline in recent months. The buyback program could help to stabilize the share price and provide some much-needed reassurance to investors.
Looking ahead, the success of IHC’s share buyback program will depend on a number of factors, including the price at which the company repurchases its shares and the overall performance of the Dubai stock market. However, the program is a positive step for IHC and its shareholders, and it signals the company’s commitment to creating long-term value.
