The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Maintains Asset Manager Rating of First Capital Investments Limited

Rating Type Asset Manager
(05-Apr-21 )
(27-Sep-20 )
Action Maintain Maintain
AM Rating AM4++ AM4++
Outlook Stable Negative
Rating Watch - Yes

The rating reflects the Company's modest market share, adequate organizational structure and limited fund slate comprising a single fund. The Company has a stable core management team, which provides support to the rating. Since Jun'20, the Company's AUMs have witnessed growth by 23% and stood at PKR 129mln at end Dec'20. However, the Fund's performance remained subdued based on 12 months rolling returns. The rating is constrained by relatively small market share (<1%) and high concentration in investor base. Top 10 investors constitute ~93% of total AUMs. The related party concentration is ~75% of the total investors, reducing the redemption pressure. The Company has reported a net profit of PKR ~15.5mln for Dec’20 (Jun'20: Loss ~PKR 3bln). Major contribution to net profits came from unrealized gain on investments. Resultantly, the equity of the Company has also improved and stood at PKR ~219mln at end Dec'20, which is above the regulatory requirement.
The rating is dependent on sustainable cash flows and profits which would ultimately results in stable equity. The Company’s ability to successfully execute its business strategy and achieve optimal utilization of its resources while leveraging group synergies remains imperative. Meanwhile, improving market share, maintaining strong fund performance, strengthening of core process and meeting the regulatory thresholds is critical.

About the Entity
First Capital Investments Limited or the 'Company' or 'FCIL' was registered as a Private Limited by shares, incorporated under the Companies Act, 2017 ("the Act"), on October 27, 1994. FCIL has commenced operations in 1995. The Company is sponsored by First Capital Securities Corporation Limited (FCSC) the holding company of First Capital group with 78.85% shareholding. Mr. Sulaiman Ahmed Said AlHoqani - An Omani Investor - holds a strategic stake of 9.2% in FCIL and major shareholding in FCSC. FCIL is currently managing one open-end, equity fund namely First Capital Mutual Fund (FCMF) with assets under management of PKR 129mln at end Dec'20. The Board of Directors comprises four members, including the CEO Mr. Imran Hafeez. The remaining three members including the chairman, are non-executive, and heads the Investment, HR and Audit Committees.

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.