A holding is a company that owns shares in other companies. Instead of producing goods or providing services itself, a holding company mainly exists to control or manage its subsidiaries. Its value is largely based on the value of the companies it owns.
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A holding company earns value through ownership and control of other businesses.
Holding companies can own full or partial stakes in multiple firms across different sectors. By doing so, they may benefit from diversification and centralized strategic management. The income of a holding typically comes from dividends paid by subsidiaries, capital gains from selling shares, or management fees. One advantage of a holding structure is risk separation, meaning financial problems in one subsidiary do not automatically affect the entire group.
However, the performance of a holding is closely linked to the success of its underlying companies. Investors often analyze the net asset value of a holding to assess whether its market price reflects the true value of its assets.
Short example:
Suppose a holding company owns 100 percent of a logistics firm and 60 percent of a technology company.
If both subsidiaries generate profits, they may pay dividends to the holding.
The holding company’s financial results then depend on the performance and value of those owned businesses.
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