The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Asset Manager Rating of NBP Fund Management Limited

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

The rating reflects the Company's established position as one of the leading players in the asset management industry. The rating incorporates the strong brand name, sound governance framework, experienced and seasoned management team, robust risk management function, and well structured investment process. A diversified fund slate across twelve categories bodes well for the Company in maintaining its competitive positioning, while attracting and retaining investor across all fund categories. This has resulted in augmented AUM's as they grew by ~11%, to ~PKR 99bln at end Sep-19. The fund performance has consistently shown good results when compared to peers. The Company's capitalization and fee generation capabilities provides cushion against market volatility. The profitability of the Company declined due to relatively lower management fee owing to the fluctuation in AUM's during FY19. This is expected to improve going forward with recent surge in equity market and AUM's growth. The rating also incorporates the Company's association with a renowned bank - National Bank of Pakistan and potential synergies.
The rating is dependent on the management’s ability to sustain its market share. Upholding strong organization structure along with retention of key personnel and consistent superior fund performance remains imperative for the rating.

About the Entity
NBP Fund Management Limited, established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. During the year, Baltoro Growth Fund acquired the entire 36% stake of Alexandra Fund Management Private Limited in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company. The Company’s nine-member Board of Directors includes three independent directors and the CEO. During FY19 and 1QFY20 there have been four new inductions on the Board of Directors. The Company is currently managing a diversified fund slate of twenty-seven funds under twelve different categories and two voluntary pension schemes.

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.