PACRA Maintains Rating of Jahangir Siddiqui & Co. Ltd. | TFC X | Jul-17
|Rating Type||Debt Instrument|
The ratings reflect Jahangir Siddiqui & Co. Limited's ('JSCL' or 'the Company') strong presence as a Holding Company in the financial sector with a portfolio of strategic investments mainly in banking (JS Bank, BankIslami Pakistan), insurance (EFU Life Assurance and EFU General Insurance), brokerage (JS Global Capital) and asset management segments (JS Investments). JS Bank is on its path to establish itself as a medium-sized bank whereas BankIslami aims to expand its presence in the growing Islamic Banking sphere. The results have been so far mixed with macroeconomic challenges and stiff competition in the banking sector. JSCL holds a significant stake in EFU General Insurance (EFUG) and EFU Life Assurance (EFUL) and plans to maintain them. After witnessing volatile markets for a while, JS Global and JS Investments are expected to improve performance. JSCL intends to diversify its portfolio and has made significant investments in LPG storage and infrastructure and OMC segments. The Company has made ~ PKR 2bln investments in these segments through its wholly-owned subsidiary, Energy Infrastructure Holding (Pvt.) Ltd. These investments are nearing the completion of the gestation phase with the amalgamation of JS Fuel (Pvt.) Ltd. and Quality 1 Petroleum (Pvt.) Ltd. The Company has very strong capital structure with low leveraging and adequate coverages. The COVID outbreak has not impacted the Company's portfolio materially, exhibiting its resilience.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion amidst the prevailing tough environment. Timely materialization of these initiatives into sustainable ventures is critical. Strong performance of subsidiaries, stable dividends, and effective management of financial profile and liquidity remains important.
Jahangir Siddiqui & Co. Ltd. ('JSCL' or 'the Company'), successor to brokerage business started in the early seventies by Mr. Jahangir Siddiqui, was established in 1991 and is listed on the Pakistan Stock Exchange (PSX). JSCL, JS Group’s flagship holding company, has a portfolio of investments categorized into a) core investments (subsidiaries), b) strategic investments and c) trading investments. Investments in the financial segment dominate the portfolio with a significant
concentration in the banking and insurance sectors. Other investments are in the energy, petroleum, and infrastructure sectors. Chief Justice (R) Mahboob Ahmed is Chairman of the BoD, while, Mr. Suleman Lalani heads the Company as CEO.
Jahangir Siddiqui & Co. Ltd. (“JSCL” or the “Issuer” or the “Company”) issued an Unlisted Privately Placed Term Finance Certificate (TFC) of PKR 1,500 mln. The tenor of the instrument was 5 years initially which is extended to 6 years due to deferment. The proceeds are being utilized for the expansion of business and other ongoing operations of JSCL. Profit is being paid semiannually in arrears on the outstanding principal amount at the rate of 6 M KIBOR + 1.4%. Original principal repayment was being paid in 8 equal semi-annual instalments, however, deferment was obtained for one year of the payment due in such a way that 20% of the original principal instalment was paid on Jan and July 2021 while 80% of the original principal instalment will be paid from Jan and July 2022. The normal payment of the principal amount will resume from Jan 2023. There is a call option attached to the TFC that is exercisable partially or in full at any time by the Issuer on a coupon payment date, subject to a 30 days’ notice at a premium of 0.25% on the outstanding face value/ principal amount.