How Do Holding Companies Make Money?
A holding company generates funds for investments in subsidiaries through multiple sources. A pure holding company with no direct operations raises money by issuing shares in itself or subsidiaries, taking on debt, or receiving payments from subsidiaries in the form of dividends, distributions, rents, interest, and service fees. It can also channel profits from high-performing subsidiaries to fund other units. A mixed-holding company has the additional option of using revenue from its business activities to fund subsidiary investments and operations. The holding company management decides on capital allocation between subsidiaries to achieve strategic growth.