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The Pakistan Credit Rating Agency Limited

Date
08-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Ahmed Sheikh
ahmed.sheikh@pacra.com

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

  • Methodology | Asset Manager Rating (May 17) [View]

Related Research

  • Sector Study | Asset Management (Apr 17) [View]
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PACRA Maintains Asset Manager Rating of NBP Fullerton Asset Management Limited
 Rating Type Asset Manager
Current
(08-Dec-2017-)
Previous
(21-Apr-2017)
 Action Maintain Upgrade
 AM Rating AM1 AM1
 Outlook Stable Stable
 Rating Watch - -

“AM1” (AM one) rating is the highest level on Asset Manager Rating scale. The rating reflects the company's positioning as a leading player in the domestic AMC industry supported by its proficient and well qualified management team, sound operating platform, and diversified product slate. Low turnover in the key management positions has helped in building a cohesive culture. Management's increased emphasis towards asset allocation and FoF funds has resulted in continuous enhancement of retail penetration (at end-Sep 17: 35%) which lends support to the company's business profile. This comes as a result of concerted efforts to augment the marketing team and utilizing the distribution network of parent bank along with the continuous improvement in the investor facilitation services. The company managed to maintain its AUM base despite the dip in the industry due to lack luster stock market performance, consequently resulting in enhanced system share. A well-structured investment process and supportive decision making infrastructure has provided consistency to the fund performance track record. The rating incorporates NAFA's association with a well-known fund management group and the country's leading commercial bank. Above factors contributed towards NAFA maintaining PKR 100bln assets under management.

The rating is dependent on company's ability to sustain its fund performance. Strengthening its market positioning in line with its peers along with consistent enhancement in retail penetration remain important. Stability in key human resource, organic growth in AUMs, and continuous advancement on the technological front will bode well for the company.
About the Entity
NAFA was incorporated in August 2005. National Bank of Pakistan (NBP) is the major shareholder of NAFA with 54% stake, followed by Alexandra Fund Management Pte. Ltd - 36% stake. With an asset base of PKR ~2trl at end-Dec16, NBP is one of the country's largest commercial bank. The CEO of NAFA holds a stake of 10% in the company. Presently, the company is managing a diversified portfolio of 25 open-end funds (15 Shariah compliant & 10 conventional), two pension schemes and several discretionary portfolios with AUM of PKR 104bln including SMA at end-Sep17 (Fund of Funds adjusted).

NAFA’s nine-member BoD comprises the company’s CEO, three representatives of NBP, two representatives of Alexandra Fund and three independent directors. The position of Chairman is held by nominee from NBP. The founding CEO, Dr. Amjad Waheed, CFA, holds a Doctorate in Business Administration; he has extensive experience in domestic and international capital markets. He is supported by an experienced and qualified team of professionals.
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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