The Pakistan Credit Rating Agency Limited
06-Sep-19
Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Downgrades the Asset Manager Rating of BMA Asset Management Company Limited
| Rating Type | Asset Manager | |
|
Current (06-Sep-19 ) |
Previous (08-Mar-19 ) |
|
| Action | Downgrade | Maintain |
| AM Rating | AM4++ | AM3 |
| Outlook | Stable | Negative |
| Rating Watch | - | - |
The rating reflects the company's decreasing market share and limited fund slate, eroding equity base due to operational losses, and absence of key management personnel. The Company's AUMs have witnessed significant reduction till Aug-2019 resulting in very small market share of only 0.1%. The equity of the Company has come under pressure due to losses and currently stands at PKR 200mln (as at end-June 2019). , which is the minimum regulatory requirement for an Asset Management Company. Any further erosion in equity will lead to regulatory non-compliance. The Company also offers Investment Advisory Services and needs additional PKR 30mln equity to fulfill this requirement. The Company is in the process of hiring a permanent CEO and the position currently remains vacant. The performance of the funds remained below the peer average in FY19. The investor concentration remains high (top ten investors: 94%), making the company vulnerable to redemption pressure.
The rating is dependent on operational and financial viability of the company and timely fulfillment of minimum regulatory equity requirement through equity injection from sponsors. Growth in AUMs, achieving sustainable profitability, improvement in organizational structure and timely hiring of key individuals remain imperative for the rating.
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 two funds under management, BMA Empress Cash Fund in the money market category and BMA Chundrigar Road Saving Fund in the aggressive fixed income category.
The company has a five member board, including the CEO (vacant position), 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.