The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Asset Manager Rating of Al Meezan Investment Management Limited

Rating Type Asset Manager
Action Maintain Initial
AM Rating AM1 AM1
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company’s established standing in the asset management industry, as the largest Asset Management Company in terms of AUMs and pioneer in Shariah Compliant investments in Pakistan. The rating incorporates the Company’s strong brand name, structured investment process and governance framework, qualified management team and solid track record of AUM growth. The Company has segregated Compliance and Audit function in line with the best practices to strengthen its control environment. The Company enjoys a robust and diversified customer base, with a high proportion of retail investors compared to peers. The Company’s association with Meezan Bank Limited – the largest Islamic bank – and ensuing synergies have supplemented funds growth. With a comprehensive portfolio of seventeen open-end Shariah Compliant mutual funds including a voluntary pension scheme, the Company offers a wide range of products for its customers, although it cannot offer certain conventional products when compared to peers. The Company’s fund performance lagged peers in recent periods but has improved lately and remained around the benchmark. The profitability of the Company has declined in FY19 and remained under pressure during 1QFY20. This is expected to improve with better stock market performance, going forward.
The rating is dependent upon the Company’s ability to sustain its market share and upholding strong investment processes and control environment. Meanwhile, consistent performance of funds compared to benchmark and peers is critical. Any sustained downturn in fund performance and/or significant loss in market share will impact the rating.

About the Entity
Al Meezan Investment Management Limited, established in 1995, is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory business. The Company, changed its status to a public unlisted company from private Limited in 2001. Al Meezan Investment Management Limited is the only asset management company in the country that is fully Shariah compliant without any conventional funds. Meezan Bank Limited is the largest shareholder of the Company with a stake of 65%, followed by Pakistan Kuwait Investment Company Limited with 30% shareholding. The CEO, Mr. Mohammad Shoaib, CFA, also holds ~4.85% stake in the Company. The CEO has over 28 years of experience in managing investment portfolios. The Company’s board is composed of ten members including the CEO, with representation of four members from Meezan Bank, two representatives of Pak Kuwait Investment Company Limited and three independent directors.

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.