PACRA Maintains Stability Rating of Dawood Income Fund

The objective of the fund is to deliver returns primarily from debt and fixed income investments without taking excessive risk.

The rating reflects good credit quality and liquidity profile of the fund emanating from its ~44% investments as cash placements with banks having minimum A+ rating and 29% with government securities having rating of 'AAA' (29%) at end Jun-18. ~9% of net assets of the fund are invested with investment avenues having AA rating and ~ 39% with AA-. Meanwhile, there was a high exposure towards debt securities, primarily Sukuks (~18%). This highlights the fund's appetite for risk though currently these Sukuks are mostly of good credit quality (A+ and above). The unit holding pattern of the fund is not adequately diversified with top ten investors representing 86% of the fund's assets.

Going forward, the fund intends to maintain exposure to government securities, corporate debt securities (Sukuks and TFCs) and cash balances. The rating is contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs/Sukuks in case of exposure to low rated instruments. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

About the Entity
786 Investments Limited (Formerly: Dawood Capital Management Limited), commenced its business operations back in 1993. In 1999, First Dawood group acquired the company and changed the name to Dawood Capital Management Limited. The company was named as 786 Investments Limited in January, 2017. The company is 15% owned by First Dawood Investment Bank, 15% by Bank of Khyber, 13% by B.R.R. Guardian Modaraba and 12% by Ms. Tara Uzra Dawood. First Dawood Group, a renowned business group, has interest in family Takaful, Modaraba, and Shariah investment advisory. The AUMs base of the company was PKR 765mln at end Oct-18, 786 Investments is managing three open end funds; categorised as Shariah compliant asset allocation, Income and Balanced Funds.

786 Investments has a seven member board including the CEO, Ms Tara Uzra Dawood. She holds a degree in Shariah finance and law from Harvard Law School. She is on the board of directors of MUFAP, is a faculty member at Danube University Krems (Austria) and has around two decades of professional experience in mergers and acquisitions, corporate law and investment management. The other board members comprise the Chairman of the board, Mrs Shafqat Sulatana. She is a professional banker and possess around four decades of experience in financial sector.