The Pakistan Credit Rating Agency Limited
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Shahzaib Khalid

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PACRA Assigns Rating Watch to the Asset Manager Rating of First Capital Investments Limited

Rating Type Asset Manager
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.

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.