The Pakistan Credit Rating Agency Limited
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Muhammad Usman

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PACRA Maintains Asset Manager Rating of First Capital Investments Limited on Rating Watch

Rating Type Asset Manager
Action Maintain Maintain
AM Rating AM4++ AM4++
Outlook Developing Developing
Rating Watch Yes Yes

The rating reflects the company's adequate organizational structure, weak historical performance and limited fund slate comprising a single fund. The company has the lowest market share in the asset management industry. 786 Investments Limited has demonstrated its interest in acquiring the only mutual fund, First Capital Mutual Fund, of First Capital Investments Limited. The earlier proposition for transfer of management rights to 786 Investments Limited of First Capital Mutual Fund was declined by the SECP. In this regard, the company re-initiated the process and is again seeking regulatory approval. If approved, the management rights of the fund will be transferred to 786 Investments Limited. In case SECP does not grant approval for the proposed transaction, First Capital Investments Limited plans to surrender its AMC’s license to the regulator and wind up the fund under management. Considering these factors, PACRA has placed the AMC rating of First Capital Investments Limited on Rating Watch Developing.

The rating is dependent on the proposed merger of the company's fund and/or the management's decision to surrender its license. PACRA will monitor related regulatory developments and update its opinion accordingly.

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 120mln at end Feb-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.