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The Pakistan Credit Rating Agency Limited
Press Release

Date
12-Jul-17

Analyst
Mohsin Naseer
mohsin.naseer@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Stability Rating of Alfalah GHP Income Fund

Rating Type Stability Rating
Current
(12-Jul-17)
Previous
(30-Dec-16)
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The investment objective of the fund is to earn competitive returns for its unit holders by constructing a low risk and liquid portfolio.

The rating reflects strong credit quality of the portfolio. The portfolio depicts diversification across asset classes. Fund took 19% exposure in cash with banks and 9% of the fund's net assets were placed with banks. The majority of exposure was with banks rated 'AA-'. The reaming assets of the fund were exposed with T-Bills (32%), TFCs (32%) having credit rating of 'A+' and above, while 6% of the net assets were exposed to MTS transactions, which due to its self-liquidating nature possess less risk over short tenure. The fund is exposed to redemption pressure as unit holding pattern of the fund is highly concentrated with the top10 investors representing 83% of the fund's assets.

Going forward, the fund intends to stay skewed towards debt instruments - rated 'A+' and above. The remaining net assets of the fund would be placed with good quality banks. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.

About the Entity
Commencing operations in Mar 05, Alfalah GHP Investment Management Limited (AGIML) is 82% owned by Abu Dhabi Group, including 40% through Bank Alfalah Limited (BAFL) and 42% through MAB Investments Inc. Meanwhile, GHP Arbitrium Holdings Limited (GHP) owns 14% stake. BAFL is the sixth largest commercial bank of the country with a branch network of over 500 branches. AGIML is currently managing sixteen open-end funds with cumulative assets under management of PKR 36bln at end-Mar17.

The company's six member BoD comprises CEO, two representatives of BAFL, one representative of GHP Arbitrium Holdings Limited, one representative of MAB Investments and one independent director. The board is chaired by Mr. Ali Sultan, Group Head - Treasury, Investments & Financial Institutions, Bank Alfalah Limited. The CEO of AGIML, Ms. Maheen Rahman, has over 17 years of rich local and international experience in the financial services. She is assisted by an able team.

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.