Analyst
Muhammad Junaid
muhammad.junaid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of NBP Savings Fund
Rating Type | Stability Rating | |
Current (19-Apr-22 ) |
Previous (18-Oct-21 ) |
|
Action | Maintain | Maintain |
Long Term | A+(f) | A+(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
NBP Savings Fund (or the "Fund") is a moderate risk profile fund. The objective of the Fund is to earn a competitive rate of return while preserving capital to the extent possible by investing in liquid assets. As of end-Dec’21, the fund has invested ~81% of its net assets in ‘AA-’ rated bank. Significant allocation towards a single bank gives rise to concentration risk. The Fund had also placed ~19% of AUMs in ICPs rated ‘AA’. Both, the WAM and Duration of the Fund were recorded at 18 days. The low WAM shields the fund from credit risk and the lower duration shields the Fund from interest rate risk. The Fund is subject to high redemption pressure due to high top 10 investor concentration, which stood at 85% at end-Dec’21. However, the highly liquid nature of the Fund provides cushion against the redemption pressure.
Going forward, the fund intends to maintain its allocation in higher rated banks. Material changes in the fund's asset allocation strategy, impacting its credit quality, will effect the rating.
About
the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 169,025mln at end-Dec'21, the Company is currently managing a diversified fund slate of twenty seven open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.