The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Asset Manager Rating of NBP Fund Management Limited

Rating Type Asset Manager
Action Maintain Maintain
AM Rating AM1 AM1
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company's dominant position as one of the leading players in the asset management industry with a growing market share (Mar-20: ~19%; Mar-19: ~15%). The company has a seasoned management team, well-developed risk management function, established brand name, structured investment process along with diversified fund slate. Low turnover at key management positions leads to cohesive team. This bodes well for the company in maintaining its competitive positioning. The AUMs base of the Company grew significantly by ~42% as the Company focused on money market and fixed income categories. The Company has a large retail customer base with improving granularity resulting in stable AUMs. The fund performance has consistently shown good results when compared to industry peers. The Company's capitalization and fee generation capabilities provides cushion against market volatility. The Company remained profitable during 9MFY20 but profitability has declined on account of lower management fee as proportion of fixed income and money market fund increased. The rating incorporates the Company's association with a renowned bank - National Bank of Pakistan - and potential synergies.
The rating is dependent on the management’s ability to sustain its market share. Upholding strong organization structure and controls along with retention of key personnel is imperative. Consistent superior fund performance remains imperative for the rating.

About the Entity
NBP Fund Management Limited, 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%. Baltoro Growth Fund acquired the entire 36% stake of Alexandra Fund Management Private Limited in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. 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 of Directors includes three independent directors and the CEO. The Company is currently managing a diversified fund slate of twenty-seven funds under twelve different categories and two voluntary pension schemes.

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.