logo
The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-19

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

Applicable Criteria

Related Research

Disclaimer
This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of EFG Hermes Pakistan Limited

Rating Type Entity
Current
(27-Dec-19)
Previous
(28-Jun-19)
Action Maintain Maintain
Long Term A- A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings reflect the Company’s association with an international financial services group, EFG Hermes, and its emerging position in Pakistan’s brokerage industry. The ratings incorporate strong sponsor support, robust governance framework and internal control environment. Direct reporting to respective group heads and centralized research function augurs well for organizational structure. Due to lackluster market performance the profitability of the Company remains depressed. The Company has a modest equity base and leveraged capital structure. Sizable liquid assets and support from parent in the form of guarantees provide comfort to the ratings.
The ratings are dependent on the management's ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry. Retention of key personnel, improvement in customer servicing tools and maintaining strong controls will remain critical.

About the Entity
EFG Hermes Pakistan Limited, a public listed company, is licensed under Securities Brokers (Licensing and Operations) Regulations, 2016, as a securities broker and provides securities research and brokerage services to institutional and individual clients. It is also engaged in investment banking activities. The Company is 51% owned by EFG Hermes Frontier Holdings LLC, which is a wholly owned subsidiary of EFG Hermes Holding S.A.E. EFG Hermes has presence in the Middle East and North Africa (MENA) region and specializes in asset management, securities brokering, investment banking, private equity and research. EFG Hermes is the first foreign investment bank and securities broker to have physical presence in Pakistan. The Company operates from its head office based in Karachi, Pakistan.
Mr. Saad Iqbal is CEO of the Company. The Company has fourteen board members, including the CEO, of which four are independent. The board meets on quarterly basis to review the business performance.

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.