Rating Details	Rating Type	BFR
	Dissemination Date	Current (06-Jun-22 )
	Action	Initial
	Rating	BFR 2+
	Outlook	Stable
	Rating Watch	-

Rating Rationale	Factor	Comment
	Ownership	Bank Alfalah Limited is the primary shareholder with ~61% of the ownership followed by CLSA Limited with ~25% of the stakes.
	Governance	The board is comprised of six members including the CEO and Chairman. Three director represents Bank Alfalah while one of the directors represent CLSA.
	Management and Client Services	ACLSA has a well designed organizational structure. Experienced management team provides sound client services.
	Internal Controls and Regulatory Compliance	Comprehensive policies are in place; compliance department ensures implementation.
	Business Sustainability	A major part of revenue emanates from equity brokerage. Corporate finance has showed some growth in CY21 to supplement the topline.
	Financial Sustainability	At end Dec 21, the NCB and LCB stood at ~PKR 534mln and ~PKR 489mln respectively showing a significant growth compared to Dec 20.

Key Rating Drivers

Alfalah CLSA Securities (Pvt.) Limited (ACLSA or The Company) mainly provides equity brokerage service while corporate finance also provides support. ACLSA enjoys one of the largest share of the foreign clientele in Pakistan. ACLSA has established rigorous protocols regarding risk assessment with the implementation of comprehensive and well-defined policies. ACLSA has outsourced its internal audit department which strengthens the internal control framework. Formation of an independent risk management department would be a positive factor. The Company has a well-defined organizational structure with seasoned management, reporting directly to CEO. Clients have been provided with online trading, research and all other basis facilities. In line with the improving market volumes in CY21 the brokerage revenue depicted an increase of ~30% to stand at ~PKR 287mln (CY20: ~PKR 120mln). The bottom-line also surged by ~PKR 32mln to stand at ~PKR 61mln. The market risk is negligible as the Company does not invest in equity securities. The rating accounts for the association of ACLSA with Bank Alfalah Limited and CLSA Limited. the governance framework may be enhanced further with the induction of independent directors for an increased oversight. As part of the long-term plan the Company intends to capture retail clientele with the use of digital platforms. Association with CLSA is an integral component of the rating decision. Maintaining a strong financial profile and retention of key human resources remains important.

About the Entity
	Legal Structure	Private Limited
	Year of Establishment	23-Sep-03
	Type of License	Trading and Self-clearing
	Majority Ownership	Bank Alfalah Limited ~62%

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Ayesha Qasim ayesha.qasim@pacra.com +92-42-35869504 www.pacra.com	Methodology | Broker Fiduciary Rating | Jan-22	Sector Study | Brokerage & Securities | Jan-22

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