The Pakistan Credit Rating Agency Limited
06-Sep-20
Analyst
Usama Zubair
usama.zubair@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Asset Manager Rating of BMA Asset Management Company Limited | Rating Watch
| Rating Type | Asset Manager | |
|
Current (06-Sep-20 ) |
Previous (06-Sep-19 ) |
|
| Action | Maintain | Downgrade |
| AM Rating | AM4++ | AM4++ |
| Outlook | Stable | Stable |
| Rating Watch | Yes | - |
The rating reflects the company's modest market share, limited fund slate, eroding equity base due to operational loss and adequate senior management. The Company's AUMs have witnessed significant decline by 24% since Jun'19 and stood at PKR 213mln resulting in very small market share of only 0.03%. The equity of the Company has come under pressure due to losses and currently stands at PKR 183mln at end Jun'20, which is below the regulatory requirement and leads to non-compliance. This is the reason the ratings are placed on Watch and highlight the need to fill the gap, while ensuring no further depletion. The Company also offers Investment Advisory Services and needs additional PKR 30mln equity to fulfill this requirement. The performance of the funds remained below benchmark in FY20. The investor concentration remains high (top ten investors: 91%), making the company vulnerable to redemption pressure.
The rating is dependent on operational and financial viability of the company and timely fulfillment of minimum regulatory equity requirement through equity injection from sponsors. Growth in AUMs, achieving sustainable profitability, improvement in organizational structure and timely hiring of key individuals remain imperative for the rating.
About
the Entity
BMA Asset Management Company was incorporated in April 2005 and acquired the license for investment advisory and asset management in April 2005 and July 2005, respectively. The ex-CEO of the company, Mr. Khaldoon bin Latif resigned in Nov-18 and the new CEO, Mr. Mian Qasim Saeed Ahmed joined as a CEO in August 2020. The management team comprises seasoned professionals and majority of the personnel have been with the company for more than a decade. The company has two funds under management, BMA Empress Cash Fund in the money market category and BMA Chundrigar Road Saving Fund in the aggressive fixed income category.
The company has a four member board, out of which two members are independent directors. Mr. Salim Khan was appointed as the Chairman of the board in October 2017. He possesses vast experience in strategic human resource consultancy and organizational development.