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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Apr-20

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 Stability Rating of 786 Smart Fund (Formerly: Dawood Income Fund)

Rating Type Stability Rating
Current
(27-Apr-20 )
Previous
(28-Oct-19 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The fund's strong credit quality and sound liquidity profile emanates primarily from its mandate to invest in low duration avenues such as cash placements in banks and ensuring low exposure to interest rate risk. At end Dec'19, ~80% of fund's assets were allocated to bank placements, whereas ~16% to Sukuk/TFCs. Average duration of the fund remained within 45 days. At end Dec'19, the Duration of the fund was 31 days. Fund's unit holding pattern is moderately concentrated with top 10 investors representing ~67% of the net assets. This exhibits low redemption pressure.
Going forward, the fund intends to maintain it's current exposure in bank placements and sukuk/TFCs. 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
786 Investments Limited is a public listed asset management company and was founded in 1990, Asian Development Bank being its co-sponsor. The Company commenced business operations of venture capital financing in 1993. Later, in 2002, First Dawood Group in partnership with Asian Development Bank converted the company's business operations to asset management. The key shareholders are First Dawood Investment Bank (~15%), Bank of Khyber (~15%), B.R.R. Guardian Modaraba (~13%) and Ms. Tara Uzra Dawood (~12%). The remaining shareholding (~45%) is held by other individuals.

786 Investments has a seven-member board including the CEO, Ms. Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of Pakistan State Oil (PSO) and MUFAP and has around 15 years of professional experience in mergers and acquisitions, corporate law and investment management. The other board members comprise four independent directors including Ms. Shafqat Sultana, also the chairperson of the board. She is a professional banker and possesses around four decades of experience in the financial sector. The AUM’s of the Company were ~PKR 550mln at end Dec’19.

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.