The Pakistan Credit Rating Agency Limited
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Mohsin Naseer

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PACRA Maintains Stability Rating of Alfalah GHP Income Multiplier Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The objective of the fund is to generate competitive returns while ensuring capital preservation by constructing a portfolio of high quality debt securities and liquid money market instruments and placements.

The rating reflects strong credit quality and sound liquidity profile. At end-May-17, fund's exposure with government securities was 25%, whereas exposure as cash and bank placements were 38% and 7% respectively with banks rated 'AA' and above. The exposure with TFCs and sukuks were 26% with the minimum rating of 'A+' & above. Other major avenue is margin trading system (end-May'17: 3.6%) which, due to self-liquidating nature, possesses less risk over short tenure. Fund carries redemption risk as the unit holding pattern of the fund is concentrated, with the top 10 investors representing 65% of the net assets.

Going forward, the rating remains dependent on maintaining majority of its net assets in government securities and maximum exposure of 20% in debt instruments having good credit quality. The investments in bank placement would also not be lower than 'A+' rated institutions.

About the Entity
Commencing operations in Mar 05, Alfalah GHP Investment Management Limited (AGIML) is 82% owned by Abu Dhabi Group, including 40% through Bank Alfalah Limited (BAFL) and 42% through MAB Investments Inc. Meanwhile, GHP Arbitrium Holdings Limited (GHP) owns 14% stake. BAFL is the sixth largest commercial bank of the country with a branch network of over 500 branches. AGIML is currently managing sixteen open-end funds with cumulative assets under management of PKR 36bln at end-Mar17.

The company's six member BoD comprises CEO, two representatives of BAFL, one representative of GHP Arbitrium Holdings Limited, one representative of MAB Investments and one independent director. The board is chaired by Mr. Ali Sultan, Group Head - Treasury, Investments & Financial Institutions, Bank Alfalah Limited. The CEO of AGIML, Ms. Maheen Rahman, has over 17 years of rich local and international experience in the financial services. She is assisted by an able team.

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.