The Pakistan Credit Rating Agency Limited
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Shahzaib Khalid

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PACRA Maintains Asset Manager Rating of 786 Investments Limited

Rating Type Asset Manager
Action Maintain Initial
AM Rating AM3 AM3
Outlook Stable Stable
Rating Watch - -

The rating reflects 786 Investment Limited’s modest standing in the competitive asset management industry. The rating takes into account reasonably experienced management team and adequate organizational structure. Strong financial strength of the sponsors is considered positive for the rating. The company’s AUMs reached ~PKR 765mln at end Oct-18 as compared to ~PKR 657mln in Dec-17, though still remained low when compared to peers. Meanwhile, the company’s rising administrative and operating expenses have impacted its profitability. The management is cognizant of this and intends to strengthen its financial performance by increasing its fund management revenue through fresh influx of AUMs as well as starting investment advisory services. The company is in the process of expanding the human resource and strengthening its research and risk management functions. The management is anticipating expansion in the fund slate and is focused to materialize its strategic plans by enhancing its position in the industry coupled with major focus on both retail and institutional clientele.

The rating is dependent on the company’s ability to enhance its market position, gain in terms of assets under management, diversification in fund slate and maintaining strong performance of its funds. Meanwhile, upholding high governance standards and strengthening of risk management is crucial for the rating.

About the Entity
786 Investments Limited is a privately owned asset management company and was founded in 1990, Asian Development Bank being its co-sponsor. The company commenced business operations of venture capital financing in 1993. Later, in 2002, First Dawood Group in partnership with Asian Development Bank converted the company's business operations to asset management. The key shareholders are First Dawood Investment Bank (15%), Bank of Khyber (15%), B.R.R. Guardian Modaraba (~13%), Miss Tara Uzra Dawood (~9%) and Mr. Ayaz Dawood (~5%). The remaining shareholding of ~43% is held by other individuals. With an AUM base of ~ PKR 765mln at end Oct-18, 786 Investments is managing three open end funds.

786 Investments has a seven member board including the CEO, Ms Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of MUFAP and has around two decades of professional experience in mergers and acquisitions, corporate law and investment management. She is supported by an experienced core management team. The other board members comprise three independent directors including Mrs Shafqat Sulatana, also the chairperson of the board. She is a professional banker and possess around four decades of experience in financial sector.

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.