The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Upgrades Rating of NBP Islamic Mahana Amdani Fund

Rating Type Stability Rating
(19-Apr-22 )
(18-Oct-21 )
Action Upgrade Maintain
Long Term A+(f) A(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Islamic Mahana Amdani Fund (or the "Fund") is a medium-risk profile fund. The Fund aims to provide monthly income to investors by investing in Shariah Compliant money market and debt avenues. During CY21, the Fund on average invested ~56% of net assets in Banks. The average allocation towards 'AA-' and above rated securities remained ~76% during CY21. At end-Dec'21, the Fund had invested ~49% of its net assets in banks, with 31% being invested in a ‘AAA’ rated bank and 13% in an ‘A+’ rated bank. The Fund had invested 19% of its net assets in government securities. Whereas, ~12% of net assets are invested in Sukuks rated 'AA' and above. The WAM of the Fund is on the higher side due to funds exposure to Government-issued Sukuks, mainly 10-year Pakistan Energy Sukuk and 5-year GOP Ijara Sukuk. It has resulted in WAM swelling to 607 days. However, the related credit risk is low as higher maturity securities are backed by GOP. During CY21, the average WAM remained high at 545 days. The duration of the Fund is 61 days, limiting the fund’s exposure to interest rate risk. The average duration was 43 days throughout CY21 owing to investment in floating rate securities. The Fund has a diversified unit holding pattern, where top 10 investors contribute towards 16% of the total Fund's Assets. Therefore, there appears a low amount of redemption pressure.
Going forward, the fund intends to maintain its current asset allocation. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk will impact the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 169,025mln at end Dec'21, the Company is currently managing a diversified fund slate of twenty seven open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.