PACRA Maintains Rating of Jahangir Siddiqui & Co. Ltd. | TFC XI | Mar-18
|Rating Type||Debt Instrument|
The ratings reflect Jahangir Siddiqui & Co. Ltd's ('JSCL' or 'the Company') strong presence as a Holding Company in the financial sector with a portfolio of investments mainly in banking , insurance, brokerage and asset management segments. JS Bank is also in process of acquiring additional stake (~7.8%) in BankIslami to further increase JS Group's financial footprint in the banking sector. JSCL holds a significant stake in EFU General Insurance (EFUG) and EFU Life Assurance (EFUL) and plans to maintain them. JSCL intends to diversify its portfolio and has made significant investments in LPG storage and infrastructure, through its wholly-owned subsidiary, Energy Infrastructure Holding (Pvt.) Ltd. (EIHPL). The investments are predominantly funded by equity. Lately, EIHPL has signed an SPA for sale of 100% of its holding in Quality 1 Petroleum (Pvt.) Ltd subject to condition precedents, and is evaluating other investment plans while, JS Petroleum Ltd. is enroute to establishing an LPG storage terminal at Port Qasim, Karachi. The Company's income stream has remained stable with the majority of dividend income emanating from EFUG and EFUL. This along with other income and investment in derivatives supplements the revenue stream. The Company has a very strong capital structure with low leveraging and adequate coverages. Lately, the Company has issued Class A Preference Shares to make strategic investments and reduce its debt to strengthen its working capital. During the year, the Company fully repaid the outstanding principal along with the accrued mark-up against its privately placed TFC IX. JSCL does not plan to take further debt in the near term. The Company's portfolio has not been impacted materially despite the capital markets downturn, 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'), a successor to the 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.
The Company has issued an Over-The-Counter Listed, Term Finance Certificate (TFC) of PKR 1,500mln. The proceeds are being utilized for the expansion of business and other ongoing operations of JSCL. The instrument carried a profit rate of 6MK + 140bps with a tenor of five (5) years (extended to 5.5 years due to deferment). The TFC will be redeemed in September 2023. The Company has a right to exercise the call option before the maturity date.