The Pakistan Credit Rating Agency Limited
10-Feb-20
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Asset Manager Rating of AKD Investment Management Limited
| Rating Type | Asset Manager | |
|
Current (08-Feb-20 ) |
Previous (09-Aug-19 ) |
|
| Action | Maintain | Maintain |
| AM Rating | AM3++ | AM3++ |
| Outlook | Negative | Stable |
| Rating Watch | - | - |
The rating incorporates the Company’s strong corporate governance structure, experienced management team and recognized name in Pakistan capital market.. However, the rating is constrained by relatively small market share (<1%) and high concentration in investor base. The Company has a stable core management team, which provides support to the rating. The Company's AUMs showed an increase of 7% and stood at ~PKR 5.44bln at end Dec'19 (Dec'18 ~PKR 5.07bln). However, the market share of the Company decreased to 0.8% at Dec'19 (Dec'18 0.9%). The funds' performance remained below average, as only AKD Islamic Income fund was able to beat the benchmark returns in CY19. Diversification in AUM base among various fund categories along with improvements in the overall operating platform will bode well for the Company. The equity of the Company has come under pressure due to losses and stands at ~PKR 167mln at end Sep'19 (Jun'19 ~PKR 197mln). This is below the minimum regulatory requirement for an asset management company, exerting pressure on the rating. Strong sponsor commitment is considered positive for the rating.
The rating is dependent on timely fulfillment of minimum regulatory equity requirement and better fund performance. Any significant delay in equity build up and/or below average fund performance will have negative rating implications.The Company’s ability to successfully execute its business strategy and optimal utilization of its resources and group name remains imperative. Meanwhile, improving market share, maintaining strong fund performance and strengthening of core process is critical.
About
the Entity
AKD Investment Management Limited commenced its operations in September 2004. The Company is registered as an Asset Management Company under the Non-Banking Finance Companies Rules, 2003. The Company is sponsored by Aqeel Karim Dhedhi Securities (Pvt) Limited (99.97% ownership). Aqeel Karim Dhedhi Securities (Pvt) Limited is majority owned by Mr. Aqeel Karim Dhedhi, Chairman of the AKD Group, and a renowned figure in Pakistan's capital market.
The Board of Directors of the Company comprises seven members, including the CEO Mr. Imran Motiwala, who has been serving as the Chief Executive Officer of AKD Investment Management Limited since 2009. The Company is currently managing seven open-end funds with assets under management of ~PKR 5.44bln at end Dec-19