PACRA Upgrades the Asset Management Rating of AL Habib Asset Management Limited

The rating upgrade of AL Habib Asset Management Limited (the "Company") highlights 1) enhanced retail penetration through digital channels and an expanded sales force, 2) technological advancements to strengthen its digital presence 3) streamlined investment strategies reinforced by robust risk management practices 4) strengthening organizational structure 5) significant AUM growth driven by a strong brand, and 6) increasing profitability and rising equity base. Additionally, the Company's strong association with Bank AL Habib Limited, a key market player, reinforces its position. The Bank is "AAA" rated by PACRA which indicates exceptionally strong capacity for timely payment of financial commitments. The Governance oversight is deemed very strong, with the sponsoring family chairing the Board and the Bank's CEO serving as a member, which bodes well for the assigned rating. The Bank's support, particularly through digital integrations and acting as a distribution agent, has been instrumental in the Company's success. The Company currently leverages the Bank's extensive branch network for distribution and client acquisition. The management is also working to increase client outreach through building on in house sales team and own branch network. Since Dec'2023, the Company's AUMs have grown significantly by 65%, surpassing PKR 200bln as of Oct'2024, depicting a market share of 6%. Projections indicate closing Dec'2024 at PKR 275bln with further market share gains and plans to further diversify the fund slate. Equity AUMs have grown by 70% to reach PKR 10bln, underscoring strong performance. The majority of AUMs have been concentrated in money market and income categories, benefiting from high interest rates through Jun'2024. The client mix, comprising both retail and institutional segments, demonstrates adequate granularity and stability in the AUM base, with retail penetration at 38% as of Oct'2024. The top-10 investor concentration at the AMC level stands at 30%, which requires dilution to better manage liquidity and mitigate redemption pressure. Fund performance has been satisfactory in the money market and income categories, with all funds delivering above-average returns. Equity category funds performed exceptionally well, aligning with the strong returns of the stock market. The Company has embraced a heritage conservative risk approach, prioritizing prudent decision-making.
On the financial front, the significant growth in AUMs has driven a 2.5x increase in management fees, reaching PKR 1,482mln during the nine-month period ended Sep'2024 (SPLY: PKR 412mln). This growth has significantly boosted profitability to PKR 1,007mln. With an equity base of PKR 2.5bln, the Company is well-positioned to pursue an expansionary strategy and explore new growth opportunities, leveraging its intrinsic capital strength.
Going forward, enhanced market penetration driven by a strengthened retail presence through digital channels and consistent fund performance will be critical. Additionally, monitoring and addressing the concentration level will remain a focus.

About the Entity
The Company incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan and is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out services under the Non-Banking Finance Companies Regulations. The Company is a wholly owned subsidiary of Bank AL Habib Limited. The Board comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 23 years in the field of Investments and Fund Management.