The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Assigns Positive Outlook to Asset Manager Rating of AKD Investment Management Limited

Rating Type Asset Manager
(30-Jun-22 )
(08-Feb-21 )
Action Maintain Maintain
AM Rating AM3++ AM3++
Outlook Positive Stable
Rating Watch - -

The assigned rating incorporates AKD Investment Management Limited's ("AKDIML" or the "Company") adequate corporate governance structure, and experienced management team. AKD Investment is managing a diversified fund slate comprising equity, Income, and money market categories, however, the equity category has a major proportion of total AUMs; on average ~50% during FY22. The Company is following a risk-aggressive approach to generate returns. Hence, the performance and AUM's size are majorly linked with the PSX performance. The average market share of the Company remained at ~ 0.8%, during FY22. The Company is planning to improve its market share by 1) strengthening retail penetration, 2) improving its technological platform, and 3) launching new products. The Company has a stable core management team, which provides support to the rating. At Mar22, the trailing 12-month return summary shows that the Funds' performance remained above benchmark and in line with the industry. Furthermore, in the terms of the Performance Ranking of Dec'21, the equity funds of the Company have secured top quartile in terms of 3-year, and 5-year performances, thus supporting the efficacy and proficiency of their research function. Diversification in AUM base among various fund categories along with improvements in the overall operating platform will bode well for the Company.
The Company is also managing Investment advisory portfolios and generating advisory fees which provides strength to the core income. While the management fee of the Company has significantly increased by ~40% during 6MCY21, majorly contributed by the equity category. The profitability of the Company has been decreased on the back of unrealized losses on investments. The equity of the Company is meeting the minimum capital requirement as at end Dec'21.
The positive outlook signifies equity funds' performance, capable research team, sustainable cash flows, and profits which would ultimately result in stable equity. The Company’s ability to successfully execute its business strategy and optimal utilization of its resources and materialization of initiatives into improved market share would remain imperative. Augment equity base stands close to regulatory requirements would stand imperative to the assigned rating.

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 AKD Group Holdings (Private) Limited (Formerly: Aqeel Karim Dhedhi Securities (Private) Limited). 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 7bln at end Jun'22.

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.