The Pakistan Credit Rating Agency Limited
28-Jun-19
Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Broker Management Rating of Alfalah Securities (Pvt.) Limited, Assigns Positive Outlook
| Rating Type | Broker Management | |
|
Current (28-Jun-19 ) |
Previous (31-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | BMR2 | BMR2 |
| Short Term | - | - |
| Outlook | Positive | Developing |
| Rating Watch | - | Yes |
Broker Management Rating of Alfalah Securities (Private) limited reflects its emerging position in the country's brokerage industry. In the preceding year, Credit Lyonnais Securities Asia (CLSA), a Hong Kong based financial services group has acquired 24.9% stake in Alfalah Securities (Pvt.) One of the directors on the board of Alfalah Securities represent CLSA. The rating incorporates the increasing strategic importance of the company to the shareholding acquired by CLSA. On foreign front, the market share of Alfalah Securities in the brokerage industry has increased. Moreover, there will be a change in entity's name to leverage CLSA's strong brand. The organizational structure is well-built, research function is well-developed and the management team includes seasoned professionals. The company’s revenue generation is mainly focused towards foreign and local institutions and high net worth individuals. The company has adequate capitalization levels with the Net Capital Balance of ~PKR 174mln as at end Apr-19.
The rating derives strength from the company's ability to build a position in the competitive brokerage industry. Meanwhile, approval of retention of key human resources remains imperative. At the same time, the operational profitability and retention of market share in lackluster equity market volumes is crucial.
About
the Entity
Alfalah Securities (Private) Limited is a financial services company, licensed as securities broker under Securities Brokers (Licensing and Operations) Regulations, 2016. The company is engaged in equity trading. The company also provides investment banking & advisory services. Alfalah Securities operates from Head office based in Karachi, Pakistan.
It is a subsidiary of Bank Alfalah Limited. The holding company, Bank Alfalah is the fifth largest private bank in Pakistan, listed on PSX and has a widespread network of 478 conventional banking branches. The bank owns ~62% stake in Alfalah Securities. Credit Lyonnais Securities Asia (CLSA) holds ~24.9% stake in the company. The remaining shareholding lies with the company's Chairman Mr. Aliuddin Ansari and the CEO Mt. Atif M. Khan. CLSA is a Hong Kong based capital markets and investment group focused on alternative investment, asset management, corporate finance, securities and wealth management for corporate and institutional clients around the world.