PACRA Assigns Initial Asset Manager Rating to JS Investments Limited
|Rating Type||Asset Manager|
The rating reflects the Company’s modest positioning in the competitive asset management industry. The rating incorporates the Company’s sound governance structure, experienced management team, adequate investment decision making process and robust fund slate. The Company managed to sustain its AUMs in absolute terms (~PKR 18bln to ~PKR 20bln) during FY20 but the overall market share decreased to ~2.4% (Jun’19: 3.6%). The Company has adequate retail customer base and the management is focusing on strengthening its digital platform for better retail penetration, distribution and customer services. The concentration at fund level remains high. The Company's product slate is tilted towards fixed income/money market funds. The Company plans to further diversify its product slate and has already initiated private equity and venture capital funds. The management has also been granted license to carry out REIT Management services. Materialization of these initiatives in AUM growth and better market share is important. The profitability of the Company remained under pressure due to increase in operating expenses and lower fee income as compared to peers. The management is cognizant of this fact and has undertaken several measures to ensure operational sustainability. Improving AUMs, in turn, fee is important for future viability. The rating incorporates the Company's association with JS Bank Limited and potential synergies due to established presence of JS Group in the financial sector.
The rating is dependent on the management's ability to effectively execute business development plans and leveraging its digital initiatives to strengthen its operations and outreach. Sustaining above average fund performance, increasing market share and further strengthening investment process remains key rating factors.
JS Investments Limited is the oldest private sector Asset Management Company in Pakistan. The company was established in 1995 and is listed on the Pakistan Stock Exchange. The Company is part of the Jahangir Siddiqui (JS) Group. JS Bank Limited holds ~85% shareholding in the Company. JS Group has strong presence in the financial sector with entities operating in banking, insurance, brokerage, and asset management sectors. The group has recently ventured into energy infrastructure and OMC segments. JS Investments possesses licenses for Asset Management Services, Investment Advisory, Private Equity and Venture Capital services. The Company has recently acquired REIT management license as well.
The Company’s board of directors comprises eight members including the Chief Executive Officer. The board is dominated by representatives of JS Bank Limited and Jahangir Siddiqui & Company Limited. The board has two independent directors and while all the other directors are non-executive directors. The board members possess strong profile and skills suited to the financial services industry. Assets under management of the Company (CIS & VPS) stood at ~PKR 18,879mln at end Jun’20 and are spread across thirteen open-end mutual funds and two voluntary pension schemes. Investment platforms are provided to investors for both conventional and Islamic markets.