Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains the Broker Management Rating of EFG Hermes Pakistan Limited
Rating Type | Broker Management | |
Current (27-Dec-19 ) |
Previous (28-Jun-19 ) |
|
Action | Maintain | Maintain |
Long Term | BMR2+ | BMR2+ |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
Broker Management Rating of EFG Hermes Pakistan Limited represents its association with EFG Group, an international financial services group and its emerging position in Pakistan’s brokerage industry. The rating reflects strong sponsor support and governance , growing market share, matrix reporting organizational structure and experienced management team of the Company. EFG Hermes Pakistan has a well-developed organizational structure, with clear reporting lines for respective heads at the group level. It is the first brokerage house in the country with a designated foreign sales team operating from UAE office. The research department draws strength from the experience of EFG Group as the Company emphasize on providing high quality market reports to its clients in a systematic way. The IT infrastructure allows full integration of the front and back office functions, allowing generation of real time reports. As a group policy, the Company does not invest in equity market and all investments have been deployed in government backed debt securities. The profitability of the Company remained under pressure due to low trading volumes. Meanwhile, the Company has NCB of ~PKR 367 mln at end June-2019 depicting adequate capitalization.
The rating is dependent upon the management's strategy to improve market share and profitability by leveraging its brand. Retention of key human resource and upholding strong controls remains critical for the rating.
About
the Entity
EFG Hermes Pakistan Limited, a public listed company, licensed under Securities Brokers (Licensing and Operations) Regulations, 2016 as a securities broker and provides securities research and brokerage services to institutional and individual clients. It is also engaged in investment banking activities. The Company is 51% owned by EFG Hermes Frontier Holdings LLC, which is wholly owned subsidiary of EFG Hermes Holding S.A.E. EFG Hermes has presence in the Middle East and North Africa (MENA) region and specializes in asset management, securities brokering, investment banking, private equity and research. EFG Hermes is the first foreign investment bank and securities broker to have physical presence in Pakistan. The Company operates from its head office based in Karachi, Pakistan. Lately, Mr. Saad Iqbal has been appointed as the CEO of the Company. The Company has fourteen board members, including the CEO, of which four are independent. The board meets on quarterly basis to review the business performance.