Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Maintains Stability Rating of NAFA Riba Free Saving 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 provide preservation of capital and earn a reasonable rate of return along with a high degree of liquidity by investing in short-term Shariah-compliant banks and money market/debt securities.
The rating reflects a strong liquidity profile of the fund emanating from the maximum exposure of fund as cash balances. At end-Dec 18, ~85% of the fund's assets were placed as cash balances with various commercial banks, ~35% of the funds were invested with bank rated ‘AAA’ whilst the remaining ~50% were invested with bank rated 'A-'. Remaining assets of the fund were invested in GoP Ijara Sukuks. The unit holding pattern of the fund is concentrated with top 10 investors representing 39% of the fund's assets which exposes the fund to a low level of redemption pressure.
Going forward the fund intends to maintain its share in Islamic commercial papers in the portfolio while keeping rest of the assets as daily cash balances and placements with 'A-' and above-rated banks. 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.