The Pakistan Credit Rating Agency Limited
28-Oct-19
Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains Stability Rating of 786 Smart Fund (Formerly: Dawood Income Fund)
| Rating Type | Stability Rating | |
|
Current (28-Oct-19 ) |
Previous (30-Apr-19 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The fund's good credit quality and sound liquidity profile emanates primarily from its mandate to invest in low duration avenues such as bank placements and ensuring low exposure to interest rate risk. At end-Jun'19, 73% of fund's assets were allocated to bank placements, whereas 26% to sukuk/TFCs. Average duration of the fund remained within 45 days. Fund's unit holding pattern is highly concentrated with top 10 investors representing 92% of the net assets, (out of which ~58% are owned investments) which exposes the fund to low level of redemption pressure.
Going forward, the fund's management intends to maintain it's current exposure in bank placements and Sukuk/TFCs. 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 asset management company and was founded in 1990, 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 Ms. Tara Uzra Dawood (~12%). The remaining shareholding of ~45% is held by other individuals. With an AUM base of ~ PKR 655 mln at end-Jun'19, 786 Investments is managing three open-end funds.
786 Investments 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 Pakistan State Oil (PSO) and MUFAP and has around 15 years 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 Ms. Shafqat Sultana, also the chairperson of the board. She is a professional banker and possesses around four decades of experience in the financial sector.