The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Maintains Stability Rating of 786 Smart Fund

Rating Type Stability Rating
(15-Apr-22 )
(15-Oct-21 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The assigned rating of 786 Smart Fund (or the ''Fund'') reflects moderate risk profile of the Fund. At end Dec'21, the Fund had allocated ~41% of its total assets as bank placement in avenues rated ‘A+’ and above’, ~41% is placed as TDRs rated ‘A+’ and above’, whereas ~5% in Sukuk/TFCs rated ‘A+’ and above. Fund's unit holding pattern is moderately concentrated with top 10 investors representing ~85% of the net assets, of which ~42% are related parties, reducing the redemption pressure and bodes well with the rating. The duration of the Fund is 31 days, at Dec'21, which also gives comforts to the rating. The overall credit quality of the Fund is good, however, not compliant with rating criteria for the assigned rating.
Going forward, the Fund's management intends to maintain its current exposure in bank placements. Material changes in the Fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
786 Investments Limited is a public listed company and was founded in 1990 with Asian Development Bank being its co-sponsor. The Company commenced business operations of venture capital financing in 1993. Later, in 2002, First Dawood Group in partnership with Asian Development Bank, converted the Company's business operations to asset management. The key shareholders are First Dawood Investment Bank (15%), Bank of Khyber (15%), B.R.R. Guardian Modaraba (~13%), and Miss Tara Uzra Dawood (~12%). The remaining shareholding of ~45% is held by other individuals and entities. 786IL has merged First Dawood Mutual Fund and 786 Rising Star Fund with and into 786 Smart Fund. The Company had AUM's of ~ PKR 980mln at end Dec'21.
786 Investments Limited has a seven member board including the CEO, Ms. Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of MUFAP and has around two decades of professional experience in mergers and acquisitions, corporate law and investment management. She is supported by an experienced core management team. The other board members comprise four independent directors including Mrs. Shafqat Sultana, who is also also the Chairperson of the board. She is a professional banker and possesses around four decades of experience in financial sector.

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.