The Pakistan Credit Rating Agency Limited
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Shahzaib Khalid

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PACRA Maintains Asset Manager Rating of BMA Asset Management Company Limited

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

The rating reflects the BMA Asset Management's modest position in the competitive asset management industry. The AUMs of the company almost doubled, witnessing an increase of ~98% from Jun-18 (PKR 598mln) to Oct-18 (PKR 1,186mln), but still remain relatively small. The rating incorporates the sound governance framework and brand name, experienced management team, limited fund slate, adequate SMA portfolio and operating platform of the company. The rating incorporates the investor concentration where average top ten investors represent ~94% of total assets under management, making it vulnerable to redemption.

Going forward, the company plans to revamp its investment decision making process and strengthen its research function by expanding human resource. The management anticipates enhancement in its product slate by prospective launch of funds mainly in capital preservation and equity category.

The rating is dependent on executing the company's strategy to enhance it's competitive position in the asset management industry. Growth in AUMs leading to better revenues and improvement in mobilization of funds from retail segment would bode well for the company. Meanwhile, upholding high governance standards, strong fund performance and exercising vigilance with reference to the risk function is critical.

About the Entity
BMA Asset Management Company was incorporated in April 2005 and acquired the license for investment advisory and asset management in April 2005 and July 2005 respectively. The ex-CEO of the company, Mr. Khaldoon bin Latif resigned in Nov-18 and the position of CEO is currently vacant. The company is in the process of hiring a new CEO. The management team comprises seasoned professionals and majority of the personnel have been with the company for more than a decade.

The company has a five member board, including the CEO, out of which two members are independent directors. Mr. Salim Khan was appointed as the chairman of the board in October 2017. He possesses vast experience in strategic human resource consultancy and organizational development.

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.