The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Broker Management Rating of IGI Finex Securities Limited

Rating Type Broker Management
(26-Aug-22 )
(15-Oct-21 )
Action Maintain Initial
Long Term BMR2+ BMR2+
Short Term - -
Outlook Stable Stable
Rating Watch - -

IGI Finex Securities Limited ("IGI" or the "Company") is a wholly owned subsidiary of IGI Holdings Limited. IGI's competitive edge lies in its distinct corporate culture and client-centric approach. The assigned rating reflects IGI's association with a well-established group and dominant player "Ali Group" in the industrial and services arena. The assigned rating is complemented by IGI’s adequate market share, well-built governance structure, and satisfactory financial strength. IGI's team is comprised of experienced and well-trained staff supported by a qualified research team with a wide coverage of the economy and all major sectors as well as a tech-driven web and mobile trading platform. Appointment of 'A' category external auditors and establishment of two board-level committees augurs well for insightful monitoring. The internal audit function of the Company is outsourced which further strengthens the independent insight. IGI serves clients all across the spectrum comprising local and foreign institutions, corporate, high net worth, and retail investors from its offices in six different cities. Formulation of the employee confidentiality agreement, insider trading guidelines, and conflict of interest policy along with KYC and CDD policies result in strong internal control and regulatory compliance. The top-line of IGI is concentrated to equity brokerage income which puts constraints on rating. The Company is not running any proprietary book hence, not exposed to market risk. A low leveraged capital structure and sizable liquid assets against trade-related liabilities provide further support to the rating. The Net Capital Balance of IGI clocked in at ~PKR 112mln with an equity base of ~PKR 328mln at end-Jun'22. The income from equity brokerage stood at ~PKR 67mln for 1HCY22, depicting a decline of ~62% due to an industry-wide downward trend in volumetric activity. Despite of huge decline in commission income, the Company managed to remain in profit. The profit after tax came in at ~PKR 5mln for 1HCY22.
The ratings are dependent on the management's ability to maintain and enhance its market share to improve its competitive position in the brokerage industry. Retention of key personnel, improved performance indicators, leverage free capital structure, continued improvement in customer servicing tools, and maintaining adequate controls will remain critical

About the Entity
IGI Finex Securities Limited is a wholly owned subsidiary of IGI Holdings Limited. IGI Holdings Limited is an investment holding company listed on PSX with strategic investments mainly in the financial sector. IGI Holdings Limited has four subsidiaries namely IGI Life Insurance (82.7%), IGI General Insurance (100%), IGI Investments (100%), and IGI Finex Securities Limited (100%). Major ownership of IGI Holdings (~72%) vests with Packages Group through sponsors (~32%) and associated entities (~40%). IGI Holdings and Packages Group which falls under the umbrella of "Ali Group" are ranked amongst the leading industrial groups of the Country with diversified interests in paper and paperboard, packaging, financial institutions, food, personal care, and real estate sectors. Strong affiliation and technical track record with international JV's have added to the success of companies within the Group. The CEO, Mr. Syed Raza Hussain Rizvi brings across over nineteen years of diversified experience in the fields of Management, Corporate Strategy, Business Development, Mergers & Acquisitions, and Capital Markets.

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.