Muhammad Zain Ayaz
PACRA Maintains Asset Manager Rating of 786 Investments Limited
|Rating Type||Asset Manager|
The rating reflects the Company’s ("786IL"or the "Company") modest positioning in the competitive asset management industry. The Company is focusing on managing only one fund i.e. 786 Smart Fund. Since Dec'19, the assets under management of the Company increased by ~9%, to PKR ~603mln at end Sep'20. The rating also incorporates the Company's good governance framework, experienced management team and adequate organizational structure. During the unprecedented situations amid COVID-19 pandemic, the Company managed to improve the financial position and turned the losses into profits. The Company recorded a profit of PKR 2.82mln during FY20 (FY19: Loss PKR 43.2mln). Other Income and share of associates' also contributed to turning around the Company's losses into profits. 786IL is also in the process of obtaining license of investment advisory services, which would ultimately strengthen the existing revenue streams. The fund performance remained strong with 786 Smart Fund outperforming the peers in the category. The Company has limited fund size. Losses in previous periods eroded its equity, although it meets the minimum regulatory requirement. Currently, the equity stood at PKR 230mln at end Sep'20. Strong sponsor commitment is considered positive for the rating.
The rating is dependent on materialization of strategy to enhance AUM's and market position of the Company. Meanwhile, maintaining strong fund performance and diversifying fund slate is important. Upholding high governance standards and strengthening of risk management is crucial for the rating.
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 603 mln at end Sep'20 (Dec'19: ~PKR 550 mln).
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.