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 PKR 2.483bln to expand the micro-infrastructure finance which was entirely lent to the microfinance clients in Nov'24. TFC is the first gender bond being issued in Pakistan and 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 Company reported an interest income on loans and investment portfolio of PKR 14.3bln in FY24 (FY23: PKR 10.2bln), driven by a 1.07 times increase in investment returns followed by loan portfolio returns. Whereas, it stood at PKR 8.4bln at the end of 6MFY25. The profit before tax stood at PKR 2.55bln at the end of FY24 (FY23: PKR 2.59bln). However, it incurred a loss after tax of PKR 672mln (FY23: profit of PKR 2.6bln) due to a new tax burden of PKR 3.2bln after losing its tax-exempt status. At the end of 6MFY25, the Company reported a profit before tax of PKR 1.8bln and a profit after tax of PKR 1.1bln.
Ratings depend on the Foundation's ability to maintain positive asset health indicators and monitor the impact of technological advancements on operational and risk efficacy.

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 ten 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 first principal payment of PKR 310mln at the end of March 2025. As of March 8, 2025, a total markup of PKR 711mln has been paid, including the most recent payment of PKR 86.3mln on the same date.