The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Assigns Initial Broker Management Rating to IGI Securities Limited

Rating Type Broker Management
(15-Oct-21 )
Action Initial
Long Term BMR2+
Short Term -
Outlook Stable
Rating Watch -

IGI Securities Limited ("IGI" or the "Company") is a wholly owned subsidiary of IGI Holdings Limited. IGI's competitive edge lies in its distinct corporate culture and client centric approach. The assigned rating reflects IGI's association with a well-established group and dominant player "Ali Group" in the industrial and services arena. The assigned rating is complemented by IGI’s adequate market share, well-built governance structure and satisfactory operating profitability. IGI's team comprised of experienced and well trained staff supported by qualified research team with wide coverage of economy and all major sectors as well as state-of-the-art web and mobile trading. Appointment of 'A' category external auditors and establishment of two board level committees augurs well for insightful monitoring. Internal audit function of the Company is outsourced which further strengthen the independent insight. IGI serves clients all across the spectrum comprising local and foreign institutions, corporate, high net worth and retail investors from its offices in six different cities. Formulation of employee confidentiality agreement, insider trading guidelines, conflict of interest policy along with KYC and CDD policies results in strong internal control and regulatory compliance. The topline of IGI is concentrated to the equity brokerage income which puts constraint on rating. The Company is not running any proprietary book hence, not exposed to market risk. Leverage free capital structure and sizable liquid assets against trade related liabilities provide further support to rating. The Net Capital Balance of IGI clocked in at ~PKR 135mln with an equity base of ~PKR 363mln at end-Jun'21. While the equity brokerage income clocked in at ~PKR 176mln for 1HCY21 (1HCY20: ~PKR 67mln). The Company earned profit amounting to ~PKR 60mln during 1HCY21 (1HCY20: ~PKR 19mln) on the back of improved brokerage income amid growth in average volumes during CY21.
The ratings are dependent on the management's ability to maintain and enhance its market share to improve its competitive position in the brokerage industry. Retention of key personnel, improved performance indicators, leverage free capital structure, continued improvement in customer servicing tools, and maintaining adequate controls will remain critical.

About the Entity
IGI Securities Limited is a wholly owned subsidiary of IGI Holdings Limited. IGI Holdings Limited is an investment holding company listed on PSX with strategic investments mainly in the financial sector. IGI Holdings Limited has four subsidiaries namely IGI Life Insurance (82.7%), IGI General Insurance (100%), IGI Investments (100%) and IGI Securities Limited (100%). Major ownership of IGI Holdings (~72%) vests with Packages Group through sponsors (~32%) and associated entities (~40%). IGI Holdings and Packages Group which falls under the umbrella of "Ali Group" are ranked amongst the leading industrial groups of the Country with diversified interests in paper and paperboard, packaging, financial institutions, food, personal care and real estate sectors. Strong affiliation and technical track record with international JV's have added to the success of companies within the Group. The CEO, Mr. Syed Raza Hussain Rizvi brings across over eighteen years of diversified experience in the fields of Management, Corporate Strategy, Business Development, Mergers & Acquisitions and Capital Markets. During 1HCY21 the equity brokerage revenue increased by 1.6x to PKR 176mln (1HCY20 ~PKR 67mln). The Company reported net profit of PKR ~60mln in 1HCY21 compared to a profit of ~PKR 19mln in 1HCY20.

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.