PACRA Maintains Asset Manager Rating of Al Meezan Investment Management Limited
|Rating Type||Asset Manager|
The rating reflects the Company’s established standing as one of the largest asset managers and competitive advantage as the first and the largest Shariah-Compliant Asset Manager in Pakistan. The rating incorporates the Company’s strong brand name, robust governance framework, structured Investment processes, and qualified management team. The Company has segregated Compliance and Audit function in line with best practices to strengthen its control environment. The Company has a diversified customer base, with high proportion of retail investors compared to peers. The ratings take into account sizeable growth in AUMs of the Company, which have increased by ~24% at end Mar-20 on YoY basis. The growth momentum is expected to continue with management focusing on strengthening its digital presence and outreach. The Company’s association with Meezan Bank Limited – the largest Islamic bank – and ensuing synergies have supplemented growth. With a comprehensive portfolio of seventeen open-end Shariah Compliant mutual funds including a voluntary pension scheme, the Company offers a wide range of products for its customers, although it cannot offer certain conventional products when compared to peers. The Company’s fund performance, especially in equity category, lagged peers in recent periods but has improved lately and remained around industry averages. The profitability of the Company declined in FY19 due to revaluation investment losses and lower fee income as focus shifted towards fixed income and money market funds. This has improved during 9MFY20 with further upside going forward with better stock market performance. The Company enjoys sound liquidity and has sufficient lines available, if need arises.
The rating is dependent upon the Company’s ability to sustain its market share and upholding strong investment processes and control environment. Meanwhile, consistent performance of funds compared to benchmark and peers is critical. Any sustained downturn in fund performance and/or significant loss in market share will impact the rating.
Al Meezan Investment Management Limited, established in 1995, is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory business. The Company changed its status to a public unlisted company from private Limited in 2001. Al Meezan Investment Management Limited is the first asset management company in the country that is fully Shariah compliant without any conventional funds. Meezan Bank Limited is the largest shareholder of the Company with a stake of 65%, followed by Pakistan Kuwait Investment Company Limited with 30% shareholding. The CEO, Mr. Mohammad Shoaib, CFA, holds ~4.85% stake in the Company. The CEO has over 30 years of experience in managing investment portfolios. The Company’s board is composed of ten members including the CEO, with representation of four members from Meezan Bank, two representatives of Pak Kuwait Investment Company Limited and three independent directors.