PACRA Assigns Preliminary Ratings to TPL Corp Limited | Privately Placed Commercial Paper ("PPCP") of PKR 1,200mln
|Rating Type||Debt Instrument|
The rating reflects TPL Corp Limited's ("TPL Corp" or "the Company") diverse pool of investments and its evolving structure as a Holding Company. TPL Group entered in the business arena through vehicle tracking and insurance business. The existing investment portfolio is still evolving. TPL Insurance remains a stable investment on the Company's book. Moreover, TPL Trakker Limited and TPL Properties Limited remain prominent players in respective sectors. However, all the investments are yet to generate sizeable dividends for the Company. TPL Life Insurance Limited provides complete health and life insurance products. TPL Security Services provides security solutions. The merger of TPL Maps and TPL Rupiya into TPL Trakker is expected to bring in synergy at Group level.
On standalone basis, TPL Corp has yet to receive consistent dividends/payout from its investments. The Company has recently diluted its stake in TPL Insurance as DEG (Deutsche Investitions- und Entwicklungsgesellschaft), a wholly owned subsidiary of KFW Group based in Germany, has acquired 19.9% stake through issuance of ordinary shares other than a right issue. Meanwhile, listing process of TPL Trakker on PSX concluded in Aug-20 while, shares remain over subscribed. The sale transaction of Centrepoint from TPL Properties balance sheet, to Bank Al Habib, has been completed lately. These initiatives have been delayed amidst prevailing economic conditions, however, have generated sufficient funds for the Group. Lately, the Company is in process of issuing Privately Placed Commercial Paper of ~ PKR 1,200mln (inclusive of greenshoe option of PKR 500mln) to meet financing requirements of its subsidiaries/associated companies. The coverages may remain constrained in the absence of material dividend income but rate cut (625 bps) by SBP would provide the respite. The ratings take comfort from demonstrated support of sponsors to raise funds. Strong governance framework remains beneficial for the ratings.
The ratings depend on the projected performance of existing strategic investments. Timely and successful issuance of Commercial Paper to improve the Company’s liquidity position is pre-eminent for the ratings. Maintenance of adequate resources for repayment remains critical.
TPL Corp Limited (formerly known as TPL Trakker Limited) is a public limited company, listed on PSX. The Company is principally engaged in making investments in Group and other companies. TPL Trakker Ltd. was incorporated in Pakistan on Dec-08, as a private ltd company and was converted into public ltd. company in 2009. It got listed on PSX in Jul-12. The Company's name was changed to TPL Corp Limited w.e.f. Nov-17.TPL Corp is majorly owned by its parent company, TPL Holdings (Pvt.) Ltd. (~62%). While, financial institutions hold ~ 6% shares. Remaining shares are owned by the local and foreign individuals.
The Company plans to issue a Privately Placed Commercial Paper of PKR 1,200mln (inclusive of ~PKR 500mln green shoe option) to bridge the investment in TPL Life Insurance and finance working capital requirement of its subsidiaries. The instrument carries markup at the rate of 6 months KIBOR plus 2.75 % per annum and will be redeemed as a bullet payment on the maturity date i.e. six (6) months after the issuance of the instrument. TPL Corp plans to repay the issue through dividend income or may dilute investment in its underlying subsidiaries.