Muhammad Zain Ayaz
PACRA Assigns Initial Asset Manager Rating to ABL Asset Management Limited
|Rating Type||Asset Manager|
The assigned rating of ABL Asset Management Company ("ABL AMC" or the "Company") reflects the adequate market positioning in the competitive asset management industry. The assigned rating incorporates the Company's association with a well-established bank which is one of the dominant players in the banking sector. The rating of the Company takes into account experienced management team, sound governance framework, adequate investment decision making process, and diversified fund slate. The ABL AMC has well established risk management framework and compliance protocols. Since Jun'20 the AUMs of the Company has shown a healthy growth by ~34%, currently standing at PKR 78bln but in terms of market share the Company remained stagnant on average market share of ~7.3%. 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 ABL AMC is also using potential synergies of ABL Bank to strengthen its retail penetration. The company is also in process of establishing its dedicated Islamic Saving Centers. The Company's product slate is tilted towards fixed income/money market funds but the Company is also planning to enhance AUMs profile in equity based fund. The concentration at fund level remains high. While the fund's performance remained satisfactory and most of the funds beat their benchmark. The Company is also operating under advisory services and is also planning to strengthen its footprint in this domain. Materialization of these initiatives in AUM growth and better market share is important. During CY20, the Company remained profitable majorly on account of increase in fund management fee and huge decline in selling and distribution expenses, further maintaining the same performance in 1HFY21. The Company enjoys sound liquidity and has sufficient lines available, if need arises. At end Jun'21, the equity base of the Company stood at PKR 2.9bln which is well above the minimum regulatory requirements.
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 consistency in fund performance, increasing market share continuation of sound profitability, retention of key management personnel, sound corporate governance and further strengthening investment process remains key rating factors.
Incorporated in 2007, ABL Asset Management is a wholly owned subsidiary of Allied Bank Limited. ABL operates with 1,400 including 117 Islamic banking branches, 6 Digital/ Self Service branches & 2 overseas branches. ABL AMC possesses licenses for asset management, pension management and investment advisory services, As the leading private sector Asset Management and Investment Advisory Company in Pakistan, offerings include a comprehensive range of both Conventional and Shariah Compliant investment solutions across all major asset classes.
The Company’s board of directors comprises seven members including the Chief Executive Officer. The board is dominated by representatives of Allied Bank 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 78bln at end Jun’21 and are spread across twenty three open-end mutual funds and two voluntary pension schemes. Investment platforms are provided to investors for both conventional and Islamic markets.