The Pakistan Credit Rating Agency Limited
27-Jun-19
Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Asset Manager Rating of Habib Asset Management Limited
| Rating Type | Asset Manager | |
|
Current (27-Jun-19 ) |
Previous (28-Dec-18 ) |
|
| Action | Maintain | Maintain |
| AM Rating | AM3+ | AM3+ |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects the company's adequately structured investment decision making process, experienced management, average fund performance and limited fund slate. The rating takes into account the company's association with a commercial bank, Bank Al-Habib Limited, though the translation of the brand name into AUMs remains limited. The company’s AUMs decreased by ~18% and stood at ~PKR 3.3bln at end Mar-19 as compared to ~PKR 4bln in Mar-18. The company made a net loss for 9MFY19 despite having significant increase in its income. The loss was mainly due to rising administrative and operating expenses. Due to losses, the company’s equity is eroding gradually and falling below the minimum regulatory capital requirement of PKR 230mln. The management intends to strengthen its financial performance by increasing its fund management revenue through the fresh influx of AUMs with a major focus on both retail and institutional clientele. The company is in the process of expanding the human resource and strengthening its functions.
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The rating is dependent on the company’s ability to sustain its system share, recoup equity position, gain in terms of assets under management, diversification in fund slate and strong performance of its funds. Meanwhile, upholding high governance standards and strengthening of risk management is crucial for the rating.
About
the Entity
HAML, incorporated in September 2005 as an unlisted public limited company, is licensed to carry out asset management and investment advisory services under the Non-Banking Finance Companies Regulations. The company is a part of Habib group, the oldest and a distinguished name in Pakistan’s banking circle, with interest in insurance, sugar, textile, auto, food and trade sectors. Habib family and associates, a distinguished name in Pakistan, owns around 70% of shareholding in the company, while Bank AL Habib being the single largest shareholder holds 30% stake in the company.
HAML’s BoD consists of six members, including the CEO. The CEO, Mr. Imran Azim, is an MBA and has profound experience in the mutual fund industry. The company is currently managing six open-end funds with assets under management of ~PKR 3.2bln at the end of May-19.