The Pakistan Credit Rating Agency Limited
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Wajeeha Asghar

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PACRA Maintains Stability Rating of Lakson Income Fund

Rating Type Stability Rating
(06-Mar-23 )
(09-Sep-22 )
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch Yes -

Lakson Income Fund (or the “Fund”) is a medium risk profile Fund. At the end Dec'22, the Fund had allocated ~74.1% in TFCs, ~15.7% in T-Bills whereas ~5.6% in cash majority in AA+ rated bank and ~4.7% in others. The Fund witnessed consistent redemptions over the last few months. Currently the AUMs of the Fund stood at PKR ~668mln at the end Dec'22. The duration of the Fund stood at 76 days at the end Dec’22, exposing moderate interest rate risk. The WAM of the Fund stood at 1,819 days, exposing the high credit risk due to long term investment in corporate and FIs TFCs. The unit holding pattern of the Fund was highly concentrated where ~84.8% were represented by top 10 investors exposing the Fund to high redemption pressure. As per the assigned rating criteria, the Fund need to remain compliant to the specified criteria by investing maximum 25% investment in A rated avenues. However, the Fund is not meeting the above stated criteria 100% due to conversion of TFCs exposure into non-performing assets. However, Lakson Income Fund received extension from the regulators for the 6-months to regularize the Fund’s exposures going forward. Considering the significant reduction of funds size, satisfactory fund performance and non-compliance from the respective criteria for the assigned rating, PACRA is keeping the Fund under surveillance and placing rating watch on the Fund.
Going forward, the Fund intend to diversify their investment in A and above rated avenues and stable the Fund's performance. Compliance with the investment policy and rating criteria for the assigned rating would remain imperative.

About the Entity
Lakson Investments Limited, the investment management company of the Lakson Group, was incorporated on January 02, 2009, as an unlisted public company. It is licensed to undertake Asset Management, Investment Advisory and Private Fund Management services. Lakson Investments is the only AMC, which offers exposure to international markets through Lakson Asset Allocation Developed Markets Fund. The Company is also managing a private equity and venture capital fund along with mutual funds and SMA products. Mr. Babar Ali Lakhani, CEO of the company, over 19 years of investment and portfolio management experience in domestic and international equity and fixed income markets.
The company’s control vests in a six-member board, comprising three non-executives, one executive, and two independent directors. The Chairman of the Lakson Group, Mr. Iqbal Ali Lakhani, is the chairman of Lakson Investment’s board. The asset under management of the company stood at ~114bln in the end Dec'22

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.