PACRA Maintains Stability Rating of Dawood Income Fund

The objective of the fund is to preserve the investor’s capital while providing a return greater than that offered by other investments of similar risk profile through investments in a portfolio of money market instruments.
The rating reflects good credit quality and liquidity profile of the fund emanating from its investments of ~69% as cash placements with banks having minimum credit rating of 'A+' at end Dec-18. Meanwhile, the exposure with debt securities, primarily TFCs/Sukuks was ~20% having minimum credit rating of A+. This highlights the fund's appetite for risk though currently these TFCs are mostly of good quality (A+ and above). The unit holding pattern of the fund is highly concentrated with top ten investors representing ~91% of the fund's assets.

Going forward, the fund intends to maintain exposure in TFCs/Sukuks and cash balances and increase exposure in government securities. The rating is contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs in case of exposure to low rated instruments. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.

About the Entity
786 Investments Limited is a public listed asset management company and was founded in 1990, Asian Development Bank being its co-sponsor. The company commenced business operations of venture capital financing in 1993. Later, in 2002, First Dawood Group in partnership with Asian Development Bank converted the company's business operations to asset management. The key shareholders are First Dawood Investment Bank (15%), Bank of Khyber (15%), B.R.R. Guardian Modaraba (~13%) and Ms Tara Uzra Dawood (~12%). The remaining shareholding of ~45% is held by other individuals. With an AUM base of ~ PKR 801mln at end Feb-19, 786 Investments is managing three open end funds. Dawood Income fund has been one of the top performing funds in the income category in last three years.

786 Investments has a seven member board including the CEO, Ms Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of MUFAP and has around two decades of professional experience in mergers and acquisitions, corporate law and investment management. She is supported by an experienced core management team. The other board members comprise three independent directors including Ms Shafqat Sultana, also the chairperson of the board. She is a professional banker and possess around four decades of experience in financial sector.