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The Pakistan Credit Rating Agency Limited
Press Release

Date
23-Apr-21

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA maintains the Broker Management Rating of Shajar Capital Pakistan (Pvt.) Limited

Rating Type Broker Management
Current
(23-Apr-21)
Previous
(04-May-20)
Action Maintain Maintain
Long Term BMR3 BMR3
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating signifies the Shajar Capital Pakistan (Pvt.) Limited’s (“Shajar Capital” or “the Company”) adequate ownership structure, conservative governance profile, satisfactory business acumen, reasonable management quality and prudent client servicing. The rating takes into account a slight decline in Company’s market share to 1.5% (FY20: ~2%). Further, adequate IT infrastructure & risk management framework and appropriately designed organizational structure with adequate departmentalization provides comfort to the rating. The Company has devised detailed policies for IT, CDD/KYC and AML. The Company’s core brokerage income improved as compare to same period last year by ~16% but not parallel with the increase in average traded volumes of KSE registering a growth of ~95% YoY. The company is exposed to market risk and potential conflict of interest amidst proprietary investment portfolio, equivalent to ~20% of net equity, amounting to ~PKR 26mln (FY20: ~PKR 17mln) in listed equities. The Company has a low leveraged structure, supported by sponsor’s loan. The Company has modest capitalization level with the Net Capital Balance of ~PKR 26mln as at 1HFY21 (FY20: ~PKR25mln) which meets the minimum regulatory requirement.
The rating is dependent on the management's ability to enhance its market share to improve its competitive position in the brokerage industry. Retention of key personnel, improvement in customer servicing tools and maintaining strong controls will remain critical.

About the Entity
Shajar Capital Pakistan (Private) Limited was formed through the acquisition of Crosby Securities in 2010, which was renamed as Burj Capital initially and now as Shajar Capital. The Company’s prime business is equity brokerage, commodity brokerage and consultancy and advisory. The Company is a subsidiary of Dar ul Shifa International (Private) Limited, which holds 89% shares. Remaining stake lies with Mr. Syed Ali Farhan Razi and Mr. Javed Yousuf Ahmedjee. The Company's board comprises four members, including the CEO, Mr. Rehan Ateeq and one Executive Director. Mr. Amir Waliuddin Chishti is the Chairman of the board. He is associated with Chishti group of companies and is also the Chairman of Dar ul Shifa (Pvt.) Limited.

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.