PACRA Maintains the rating of Kashf Foundation | PPTFC | PKR 2.483bln | Dec-23

The assigned rating emanates from the prominent profile of the Kashf Foundation (or the "Company") in the Microfinance sector of Pakistan. The Company facilitates access to business loans, empowering women to achieve economic independence. Kashf Foundation issued a Rated, Secured, Privately Placed, Listed Term Finance Certificate (“TFC”) amounting to PKR 2.483bln to expand the micro-infrastructure finance, which started lending to the microfinance clients from Dec-23. TFC is the first gender bond being issued in Pakistan and the MENA regions. The rating of TFC is also supported by its strong security structure, i.e., (a) the TFC is fully principal guaranteed by Infrazamin Pakistan Limited (IZP), (b) Exclusive lien on a debt service reserve account ('DSRA'), which holds an amount equivalent to two quarterly outstanding interest payments throughout the life of the TFC, on a rolling basis, (c) Exclusive lien on a Debt Payment Account ('DPA'), which is funded 7 working days prior to the payment date. IZP “Guarantor” is an innovative, for-profit credit enhancement Guarantee Company, conceived and designed to issue guarantees for promoting private infrastructure projects. It leverages InfraCo Asia and GuarantCo’s infrastructure expertise in Pakistan alongside Karandaaz's local market insights and financial inclusion investment track record. The microfinance sector, comprising Microfinance Banks (MFBs), Microfinance Institutions (MFIs), and Rural Support Programs (RSPs), reported a Gross Loan Portfolio (GLP) of ~PKR 597.6bln in CY24 (CY23: ~PKR 546.1bln), with MFIs and RSPs accounting for ~23% of the total. Over time, the MFIs and RSPs segment has demonstrated stability in terms of active borrowers, although average loan sizes have continued to expand. Asset quality in the MFI segment improved, with NPLs declining to ~1.57% in CY24 (CY23: ~2.80%). By contrast, MFBs experienced asset quality pressures, with NPLs rising to ~10.67% in CY24 (CY23: ~8.20%). During FY25, Kashf's GLP reached ~PKR 37.1bln (FY24: ~PKR 29.5bln) and investments in government securities and mutual funds reached ~PKR 8.3bln (FY24: PKR 6.8bln). Interest income from loans and investments rose to PKR 17.5bln in FY25 (FY24: PKR 14.3bln), driven by higher portfolio yields. The Company reported a notable turnaround in its sustainability by posting a surplus after tax of PKR 2.66bln in FY25 compared to a deficit after tax of PKR 672mln in FY24 (FY23: surplus after tax of PKR 2.6bln).
Ratings are underpinned by the Company’s ability to maintain sound asset quality through prudent credit practices, alongside maintaining a strong liquidity and funding profile to support continued portfolio growth.

About the Entity
Kashf Foundation was incorporated in 1996 and registered with SECP in 2007 as a Public Company limited by guarantee. The overall control of the Foundation vests in seventeen members Board of Directors. Dr. Hafiz Ahmed Pasha is the Chairperson of the Board. Ms. Roshaneh Zafar is the founder and CEO of Kashf Foundation.

About the Instrument
Kashf Foundation issued a Rated, Secured, Privately Placed, Listed Term Finance Certificates (“TFC”) amounting PKR 2.483bln on December 08, 2023. The TFC has a tenor of 3 years and carries a profit rate of 3MK+1.5% p.a to be paid quarterly in arrears. The utilization of the loan proceeds is such that 70% of the proceeds have been utilized to issue micro-infrastructure loans directed towards the welfare of women and 30% to meet working capital requirements. As per client representation, the estimated amount is maintained in both DPA and DSRA accounts. The Company made its second principal payment of PKR 310mln at the end of June 2025. As of June 8, 2025, a total markup of PKR 784mln has been paid, including the most recent payment of PKR 73mln on the same date.