The Pakistan Credit Rating Agency Limited
27-Sep-19
Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Assigns Rating Watch to the Asset Manager Rating of First Capital Investments Limited
| Rating Type | Asset Manager | |
|
Current (27-Sep-19 ) |
Previous (28-Mar-19 ) |
|
| Action | Maintain | Maintain |
| AM Rating | AM4++ | AM4++ |
| Outlook | Negative | Developing |
| Rating Watch | Yes | Yes |
The rating reflects the company's very small market share (lowest in industry), adequate organizational structure, limited fund slate, eroding equity base due to losses and weak fund performance. The company previously decided to transfer management rights of its fund to another AMC, however, this proposal was rejected by the regulator. The company's management was of the the view that in case the fund is acquired, the company will surrender its AMC's license. The rating watch signifies uncertainty regarding the future prospects and continuity of operations. The matter will be discussed in the upcoming board meeting due in October 2019. PACRA will monitor the situation and may take future action accordingly.
The rating is dependent on the board's decision regarding the future prospects and continuity of business operations. Meanwhile, maintaining all regulatory requirements are critical. Any shortfall in this regard will have a negative impact.
About
the Entity
First Capital Investments Limited (FCIL) commenced operations in 1995. The company is sponsored by First Capital Securities Corporation Limited (FCSC) the holding company of First Capital group with 87% shareholding. Mr. Sulaiman Ahmed Said AlHoqani - An Omani Investor - holds a strategic stake of 9.2% in FCIL and major shareholding in FCSC. FCIL is currently managing one open-end, equity fund namely First Capital Mutual Fund (FCMF) with assets under management of PKR 83mln at end Aug-19. The Board of Directors comprises four members, including the CEO Mr. Imran Hafeez. The remaining two members including the chairman are independent.