The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Asset Manager Rating of JS Investments Limited

Rating Type Asset Manager
(09-Aug-21 )
(01-Sep-20 )
Action Maintain Initial
AM Rating AM2 AM2
Outlook Stable Stable
Rating Watch - -

The assigned rating reflects modest positioning of JS Investments Limited (“JSIL” or the “Company”) in the competitive asset management industry. The rating incorporates sound governance framework, experienced management team, adequate investment decision making process and satisfactory control infrastructure. The AUMs of JSIL, on-average, remained around ~PKR 21.6bln during FY21 and declined to PKR 17.6bln at end-Jun’21 due to redemption from JS Cash Fund. Consequently the market share reduced to ~1.7% (Jun’20: 2.4%) but it was replenished subsequently. JSIL has an adequate product slate to cater the needs of conventional and Shariah focused clientele. However, the AUMs are tilted towards money market / fixed income funds resulting in lower management fee and profitability. JSIL has reported a loss of ~PKR 39.8mln for CY20 (SPLY: PKR ~86.6mln). The equity stood at ~PKR 1.8b1n at year end-Dec’20, which is well above the minimum capital requirement of PKR 230mln. The overall fund performance remained satisfactory, where Equity, Shariah Compliant Money Market, Income and Fund of Funds comfortably exceeded the benchmarks. Ms. Iffat Zehra Mankani joined as CEO of the Company in Apr'21 in place of Mr. Hasnain Raza Nensey. Subsequent to the reporting period Chief Investment Officer has resigned and the process to hire replacement is in progress. In accordance with the growth strategy of digitalization, the management is planning to make deep inroads into the retail clientele with equity-centric approach to enhance the management fee and also working out to launch new funds and ETF. JSIL has also acquired licenses for private equity, venture capital and REIT management to further support the core income. Materialization of growth strategy and digital initiatives for improved AUMs, market share and profitability are important for future viability of the assigned rating. The rating incorporates the Company's association with JS Bank Limited and potential synergies due to established presence of JS Group in the financial sector.
The rating is dependent on the management's ability to effectively execute business development plans and leveraging its digital initiatives to strengthen its operations and outreach. Sustaining above average fund performance, increasing market share and further strengthening investment process remains key rating factors.

About the Entity
JS Investments Limited was established in 1995 and is listed on the Pakistan Stock Exchange. The Company is part of the Jahangir Siddiqui (JS) Group. JS Bank Limited holds ~85% shareholding in the Company. JS Group has strong presence in the financial sector with entities operating in banking, insurance, brokerage, and asset management sectors. The group has recently ventured into energy infrastructure and OMC segments. JS Investments possesses licenses for Asset Management, Investment Advisory, Private Equity, Venture Capital and REIT management.

JSIL’s control vests in seven-member board of directors including the CEO. There are two independent directors while all other directors except the CEO are non-executive. Assets under management of the Company (CIS & VPS) stood at ~PKR 17,616mln at end-Jun’21 and are spread across twelve open-end mutual funds and two voluntary pension schemes. Investment platforms are provided to investors for both conventional and Islamic markets.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.