PACRA Revises Instrument Rating of TPL Corp Limited | PP Sukuk | Jun-22

TPL Corp Limited functions as the parent entity for the TPL Group, overseeing a diverse asset base across varied industries. Core group entities encompass TPL Trakker Limited, TPL Insurance Limited (non-life insurance and Window Takaful services), and TPL Properties Limited (real estate development via its REIT Management Company and TPL REIT Fund I). Previously, the Group realized capital gains by divesting its Centrepoint office tower in Karachi. TPL Life Insurance secured a public listing through a reverse takeover of Dar Es Salaam Textile Mills Limited, whereas TPL E-Ventures targets venture capital opportunities. Furthermore, alongside Abhi (Private) Limited, the Group finalized the acquisition of ABHI Microfinance Bank Limited (formerly FINCA Microfinance Bank Limited), establishing a footprint in digital banking and embedded financial services. The Company's PKR 2,190mln Sukuk, issued in Jun-22, was raised to reprofile existing debt and acquire additional shares in group entities, expanding TPL Corp's asset exposure. The instrument is secured against group company shares, maintaining a security margin of 40%. As a holding company, TPL Corp remains dependent on dividend income and capital gains, neither forthcoming at a significant level, dividend flow remains modest, while capital gains are contingent on transactions maturing, a time-taking process dependent on pricing and execution. Consequently, the financial risk profile faces ongoing pressure, with sponsor support constrained by limited cash flow predictability. To strengthen liquidity, the divestment of TPL Corp's stake in TPL Insurance Limited to Jazz International Holding Limited has been executed. TPL Corp continues to hold ~17% in TPL Insurance, while offloading 53.8% ownership. While the proceeds have supported group-level deleveraging, a mismatch still persists between available cash flows and current obligations, for which management is actively pursuing new initiatives, and the overall credit profile continues to remain under strain, contributing to the current rating action. Ratings continue on Rating Watch, with outlook maintained at 'Developing'. Timely settlement of upcoming debt maturities remains important.
Principal is to be repaid in six equal semi-annual installments, three paid to date, amounting to PKR 1,095mln. Profit is paid quarterly, sixteen quarterly payments amounting to PKR 1,480 mln have been paid.

About the Entity
TPL Corp is a public listed company. TPL Corp is majorly owned by its parent company, TPL Holdings (Pvt.) Limited (~44.6%). Meanwhile, ~0.042% of shares of the Company are held by mutual funds. The Company has a free float of ~55.4% through local and foreign individuals. Mr. Ali Jameel, an established entrepreneur, is the CEO and is aided by a team of experienced professionals.

About the Instrument
TPL Corp issued PP Sukuk amounting PKR 2,190mln in Jun'22 to support the reprofiling of existing debt and acquire additional shares in group companies. The profit is being paid quarterly in arrears at the rate of 3M KIBOR + 2.25% per annum calculated on a 365 days basis on the outstanding principal amount. Principal redemption began in Dec 2024. The principal is being paid in six equal semi-annual installments commenced from 23-Dec-24 amounting to PKR 365mln each.