PACRA Upgrades Asset Manager Rating of Alfalah Asset Management Limited

The rating reflects Alfalah Asset Management Limited's (the "AMC" or "AAML") prominent position in the asset management industry, supported by i) a structured investment process ii) sound governance structure and iii) proficient and qualified management. A new management team is in place now and changes on the board of directors are also done. On the back of these initiatives, the Company has gained significant market share through aggressive growth in AUMs, which currently stands at PKR ~108bln representing a market share of 6.3%. The new management team intends to enhance the fund slate while strengthening overall risk management and control processes. Going forward, the AMC is planning to diversify its product slate further, thereafter in addition to CIS, Advisory ETF, and VPS, i) REIT schemes and ii) private equity schemes would be added. The addition of new product streams would reap the benefits in the form of growth in revenue base. The digital platform is also being strengthened for better retail penetration, enhanced customer services and to create synergies with the parent bank. The current AUM mix depicts an adequate with retail vs. corporate ratio of 40:60. inclusive of HNWIs. Considering the high-interest rate environment, the fund slate is tilted more towards money market funds with ~80% of total assets concentrated in this category (Islamic and conventional). However, the Company has also further diversified its fund's slate by introducing plans in Fixed Rate/Return categories. At the Investor's concentration level, concentration risk is to be reduced both at the fund level and at the company level. While the funds' performance remained well above satisfactory levels with majority of the funds performed positively in comparison to peers.
The management fee of the Company improved to PKR 227mln during 6MCY23 (6MCY22: PKR 153mln). The profit after tax stood at PKR 94mln during the 6MCY23 (6MCY22: PKR 71mln). The equity of the Company stood at PKR 1.9bln at the end Jun'23, which is well above the minimum capital requirement. The ratings find comfort from the Company's association with Bank Alfalah Limited and potential synergies due to the established presence of the sponsor bank's branch network.
Sustainable profitability, market share, and fund performance would provide support to the ratings. While materialization of the initiatives as represented by the management would remain imperative to the ratings.

About the Entity
Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited) was incorporated on Oct 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds, offer investment advisory services, manage pension funds, conduct REIT and Private Funds managed businesses. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. Recently, GHP Arbitrium has divested it's share in the AMC and the current ownership structure stands with MAB Investments Inc. (~59.8%) and BAFL (~40.2%). The Company’s board of directors comprise eight members including the Chairman. The chairman of the Board Mr. Atif Bajwa has recently joined the Board. Mr. Bajwa has an extensive international career spanning more than 40 years of executive leadership roles in banking, and of multiple boards and public interest positions. The CEO - Khuldoon Bin Latif has joined the AMC in Mar'23 and has diversified experience in capital markets for over 18 years.