What are Investment Holding Companies (IHCs)?

About Investment Holding Companies (IHCs):

• IHCs, commonly referred to as Holdcos, are entities which hold assets and securities of other listed companies, most commonly of their own group firms.
• IHCs own a controlling interest in one or more companies but don't provide other services (such as the production of goods or services) or engage in business directly.
• It only serves as an ownership vehicle of other companies or investments.
• Its primary purpose is to hold and manage investments in one or more subsidiary companies.
• The holding company may or may not provide direct operational support to the companies it owns.
• IHCs come in several forms, including private equity firms and publicly traded corporations.
• An IHC may provide a vehicle for multiple investors to pool their funds and collectively invest around a specific investment objective or strategy, e.g., real estate.
• They may be built around an industry vertical or broadly diversified across multiple industries.
• But they all have the same focus: to maximize investor returns through asset management and capital allocation.
• Holding companies often look for businesses with growth potential or companies in need of restructuring or operational improvements.
• They provide strategic guidance, financial resources and connections to help grow ‌businesses (i.e., their investments).