The Pakistan Credit Rating Agency Limited
18-Apr-19
Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of NAFA Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (18-Apr-19 ) |
Previous (04-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A-(f) | A-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund's objective is to earn a reasonable rate of return in a Shariah-compliant manner by investing in Shariah-compliant debt securities, money market instruments and bank deposits.
The rating reflects the average credit quality of the fund. Currently, fund's exposure with sukuk is ~19%, while ~52% of the fund's assets are exposed towards bank deposits with banks rated 'A-' and above. Exposure with 'AAA' rated banks were ~4% whereas with A- rated banks exposure were ~46% at end-Dec 18. The unit holding pattern of the fund is reasonably concentrated with top10 investors representing ~27% of the fund's total assets.
Going forward, the fund intends to maintain its allocation towards banking deposits. The remaining asset will be invested in Shariah-compliant securities and good quality debt 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, remains critical 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 Pte. Ltd. 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, also holds a 10% stake in the company.
The company’s nine-member Board of Directors include three independent directors and the CEO. During the year, there has been some new induction in the Board of Directors. The company is currently managing a diversified fund slate of twenty-six mutual funds and two pension funds.