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The Pakistan Credit Rating Agency Limited

Date
15-May-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Asset Manager Rating Methodology (Jun 16) [View]

Related Research

  • Sector Study | Asset Management (Apr 17) [View]
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PACRA Upgrades Asset Manager Rating of Lakson Investments Limited
 Rating Type Asset Manager
Current
(15-May-2017)
Previous
(08-Jun-2016)
 Action Upgrade Harmonize
 AM Rating AM2+ AM2
 Outlook Stable Stable
 Rating Watch - -

The rating reflects LI strong governance practices, robust risk management framework, and
systematic and elaborate decision making process. The rating incorporates the company’s well thought out strategy of catering to the sophisticated needs of institutional and high net worth investors. This should enable it to capture volumes and offer unique products in an otherwise crowded asset management industry. It is approaching its target market through three streams a) Mutual Funds, b) Separately Managed Accounts (SMA), c) Private Equity and Venture Capital Fund opportunities the management has concerted efforts towards effectively utilizing group's franchise value coupled with sound operating platform and strengthened investor services. Conversion of the International Fund to the Islamic Asset Allocation Fund has helped the company to accumulate growth in open-end Funds. The company has engaged a London based Risk Management Consultancy to enhance its risk management process. Lakson has a strong research function which provides extensive analysis to support the fund management team in an effort to generate consistent fund performance. The company experienced lower growth in the conventional area of retail mutual fund as the company's main focus was on the development of the segregated mandate from institutional investors. Due to the institutional product development the company has a substantial number of dedicated institutional investors including group/family clients.

The rating depends on the company’s ability to implement its strategy of building volumes (institutional & high net worth individuals) while staying on the sidelines, of mass retail segment. Strong and stable performance in SMAs and Mutual funds remain imperative. Identifying and acquiring right assets in the private equity space, since this being relatively new to Pakistan, would be challenging and remains to be seen.
About the Entity
Incorporated in January 2009, Lakson Investments (LI) is the investment management company of the Lakson Group, wholly owned through Siza Services (Private) Limited. Lakson Group has
interests in multiple sectors including agri­business, consumer non­durables, fast food,
information technology, insurance, media, paper & packaging, surgical instruments, and travel.
The company is currently managing six open­end funds ­ covering Equity, Money Market,
Income and Asset Allocation categories ­ with assets under management over PKR 15bln at end­Mar17. The company is currently managing 44 SMA mandates amounting to ~ PKR 14bln.

The eight­member BoD comprises four independent directors and four executives of group companies. The Chairman of Lakson Group, Mr. Iqbal Ali Lakhani, is the Chairman of LI's board. The CEO, Mr. Babar Ali Lakhani, has vast investment management experience in local and foreign markets. Mr. Kashif Mustafa (COO), reports directly to the CEO, is supported by thirteen departments comprising Admin, Business Development, Compliance, Finance, HR, Investments, Investor Relations, IT, Marketing, Operations, Research, Risk, and Transfer Agency.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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