Holding company stock

Hi analysts,

I’m starting to value a listed holding company that owns 4 OpCos (engineering&construction industry), one of which is also listed in the same country. I thought that the best approach to value the stock of the HoldCo is to run a sum-of-parts valuation, applying market multiples to the three non-listed OpCos and then adding the value of the listed OpCo. Am I right with this approach?

Another important question is that I took a look at the listed OpCo and its current Market Cap is 2 billion, whereas the HoldCo is only 800M. What am I missing here? HoldCo owns 60% of the listed OpCo, and that would be already 1.2 billion… The other 3 non-listed OpCos are not value-destroyers at all. I guess it has to do with my non-experience in valuing holding comps.

Thanks in advance for your comments.


holding companies trade at a discount to the sum of parts. I belive this is partly due to added difficulties/costs in separation/liquidation of the parts

How much debt does Holdco have?

If I have $1.2B in stocks but have $400mm in debt, my equity is only worth $800mm.

Holdcos often add leverage.

Agreed, discount due to time and costs associated with breaking up and liquidating.