The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Upgrades Stability Rating of NBP Savings Fund

Rating Type Stability Rating
Action Upgrade Maintain
Long Term A+(f) A(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating captures the essence of change in the investment policy framework of the fund. This has reduced the overall risk profile of the fund. The placement of funds in Cash and near cash instruments which include cash in bank account (excluding TDRs), government securities not exceeding 90 days maturity, will be in higher of the 'A' spectrum. The credit risk is expected to remain on the lower side. At the same time, the fund policy dictates higher allocation to liquid avenues. This enhances the liquidity profile of the fund. At end Jun'20, the fund had invested ~87% of funds with banks mostly rated 'AA-' and above. The fund also had an exposure of ~11% in MTS. The unit holding pattern of the fund is highly diversified, top ten investors represent ~70% of the funds assets which increases the redemption pressure.
Going forward, the fund intends to maintain its allocation in higher rated banks, while the exposure in MTS will be increased. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), 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%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.

The Company’s nine-member board comprises the CEO, three representatives of National Bank of Pakistan, two representatives of Baltoro Growth Fund and three independent directors. With overall assets under management of PKR 126,853mln at end Jun'20, the Company is currently managing a diversified fund slate of twenty seven open-end funds and two voluntary pension schemes under twelve different categories.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.