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, Assigns Negative Outlook

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

The asset manager rating of the company incorporates its modest market share and stress on income resulting in operational losses. Consequently, the net equity of the company has fallen below the minimum regulatory requirement. Thus the outlook on the rating has been revised from stable to negative. The shortfall in equity amount is expected to be abridged through equity injection in the near future by shareholders. The company is in the process of hiring a new CEO and the position currently remains vacant. The company’s mutual funds slate spans over two funds only, belonging to aggressive fixed income and money market categories. Although the company has increased AUMs in CY18, investor concentration remains high (top ten investors: 94%), making the company vulnerable to redemption pressure. The performance of the funds remain below peer average in CY18.

The rating is dependent on timely fulfilment of minimum regulatory equity requirement. Any significant delay in this regard will result in rating downgrade. Meanwhile, hiring of key personnel and growth in AUMs, to stem losses, remain 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.