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The Pakistan Credit Rating Agency Limited
Press Release

Date
16-Apr-21

Analyst
Shazia Afzal
shazia.afzal@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 NBP Active Allocation Riba Free Savings Fund

Rating Type Stability Rating
Current
(16-Apr-21)
Previous
(16-Oct-20)
Action Maintain Maintain
Long Term A-(f) A-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects moderate strength of the fund's credit and interest rate risk profile, considerable holding of cash and bank balances reinforce the liquidity profile. The objective of the Fund is a high degree of liquidity by investing in short-term Shari’ah compliant banks deposits and money market/debt securities. As per the authorised investment policy, the fund may invest in shariah compliant government securities up-to 75% of the net assets with maximum 3-years maturity and the policy also dictates a minimum 25% allocation in Riba free deposits (excluding TDR). This strengthens the fund's interest rate and liquidity risk profile and also provides comfort in case of redemption pressure.The performance of the Fund will be compared against a Benchmark based on average of 6-Month deposit rates of A- and above rated Islamic Banks. 6-month average deposit rates of three A rated Islamic Banks/Islamic windows of conventional banks. At end Dec'20, ~29% of fund's assets were placed with banks rated 'AAA' to 'A+'while ~14% in commercial papers and ~13% in Sukuks. The unit holding pattern of the fund is highly concentrated with top ten investors representing ~100% of the fund's assets. At end Dec'20, major investments in the fund comprised of the AMC's own funds.
Going forward, in accordance with the investment policy the fund may increase its exposure in short term Sukuks and invest the remaining assets with banks while keeping under consideration the market expectation. 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
NBP Fund Management Limited (or the "Company"), 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%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. 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. With overall assets under management of PKR 163,473mln at end-Dec'20, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.